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Howard Davidowitz Doesn't Pull His Punches

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Check out this clip from Bloomberg from Tuesday. Howard Davidowitz makes economist Christopher Rupkey look a bit silly. The debate took place in the wake of the Commerce Department's report that retail sales were up 2.7 percent in August--the best monthly number in about three years. The "Cash for Clunkers" program boosted auto sales. But even if you strip out auto sales, retail sales were up 1.1 percent.

Davidowitz goes on a rant calling the figures "imbecilic" and argues the Commerce Department sales figures shouldn't be viewed as a sign of recovery. For one thing, he points out that almost every major retailer and every department store chain is still reporting monthly same-store sales declines. Davidowitz also points out that the government's figures include things like health care spending and prescription drugs, which really shouldn't be taken as a sign of a rebound in consumer spending. That gels with what I've heard consistently within the industry--that the same-store sales numbers, while they have their own faults, are a better metric to track than the monthly Commerce Department figure.

In a similar vein, economist Dean Baker pointed out another factor. He wrote, "If gas sales are taken out of the picture, then the increase in August was just half as large. If we look over the last two months, the rise in non-auto sales, excluding gas, has been less than 0.2 percent."

Rupkey's response to Davidowitz is also a bit weak. He hedges by saying that's he's not an expert in retail metrics and that he is "only a simple economist." He also acknowledges that there is often a disconnect between chain store sales and the Commerce Department's figure, but then concludes, "as an economist I can say that the consumer is back because that is what the economic data shows."

It's really an eye opener. Faced with an argument and supporting data Rupkey demurs and essentially says that if this number indicates a recovery, then there's a recovery--any contravening evidence by damned.

For other recent video clips, check the Retail Traffic VideoWire.

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Elaine Misonzhnik

Senior associate editor Elaine Misonzhnik has been writing for National Real Estate Investor since June 2006 and has covered commercial real estate for more than 12 years. She first became...
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