Reconciling Retail Data

The Commerce Department reported retail sales numbers grew 1% in May, and revised April retails sales growth to 0.4%, up from the original estimate of 0.2%. This data is somewhat promising in light of the other troubles the consumer is facing - rising joblessness, falling home prices, and rising consumer prices including food and gas.

The retail sales report also demonstrated a 1.2% increase in sales among general merchandise stores, such as WalMart. Much of this spending increase could be related to the $300 checks received from the government stimulus package. Auto and home sales continued to show weakness in light of rising gas prices, and lends credence to the notion that much of the spending surge could be tied to the stimulus checks.

The promising retail data comes just one week after the Labor Department reported the largest one month increase in the unemployment rate to 5.5%, up from 5.0%.

There is some evidence that the offline world's performance can have some impact on the online world. TNR reports that online display advertising growth slowed to 8.5%, about half the pace of the previous year. Online advertising continues to grow faster than tv's, newspapers and other media. Similarly, non-store retailers - i.e. ecommerce and catalog companies - continue to maintain the strongest growth on a relative basis vs. other retail scenarios. eMarketer is forecasting that ecommerce sales will still top 14% in 2008.

Whether these online trends continue to be insulated from the offline trends will determine the overall economic outlook for 2008.