The bad economic news this morning was that after taking into account inflation, retail sales, which rose 0.6% nominally, were only up 0.2%, and last month’s number, which I described as making a “face-plant,” was revised down a further -0.3% to -1.1%.In other words, the net result was that real retail sales were -0.1% worse than last month’s poor result as initially reported.Which is bad enough. But it means that the last two months are the worst post-pandemic numbers in almost three years. Below I show them in comparison with real personal consumption on goods, the similar metric from the personal income and spending report, normed to 100 as of just before the pandemic:
I included the second number above because real retail sales and real personal spending on goods tend to track one another fairly closely over time, and both (/2) tend to forecast the trend in nonfarm payrolls. What has been compellling over the past half year is the marked divergence between the two spending measures, as retail sales have declined, while real personal spending has continued to increase. Here’s the record of both compared with jobs going back 15 years measured YoY:
On that same YoY basis now, real retail sales (blue) are down -1.6%, after a revised -2.0% in January, meaning a (noisy!) trend forecast of a YoY decline in jobs of over -0.5%, vs. the real personal spending forecast of roughly a 1% gain: 
Usually in the past (as, going back almost 75 years) such a decline in real retail sales has meant recession – but not in the last 18 months. I continue to expect the unusual large divergence between the two spending measures to resolve, hopefully in the direction of real personal spending.More By This Author:Good News And Bad News Thursday: The Good News Is Jobless Claims The Most Potent Labor Market Indicator Of All Is Still Strongly Positive February Consumer Inflation: The Tug Of War Between Gasoline And Shelter Continues
