Economics Update

H/T Calculated Risk

It's official: retail sales just cratered. Retail sales fell 2.7% from November to December, and this is after November was adjusted down to 2.1 from the previously reported as a 1.8% drop.

It's a 9.8% year over year drop, but adjusting for inflation declined by 11.3%. It's a record, and a very scary one.

It's why Nissan is moving its Auto plants to a 4-day week. No one is buying anything.

Expect to see more bankruptcies increasing in retail.

The department store Gottschalks and the clothing store Goody’s are filing for bankruptcy.

We will see more of this as retailers realize realize that the Christmas season did them in.

Also, note that part of the reason for this is that the credit crunch appears to be easing, which means that getting debtor in possession financing, which allows continuing operations under reorg, is easier, which makes bankruptcy easier.

That being said, the bankruptcy filing by Nortel still surprises me.

I'm not sure how much of this is the economy, how much is that it never recovered from the dot-bomb collapse in 2000, and how much is that it's still very much a telephone equipment company.

In real estate foreclosure activity just spiked again in California, they recently passed a law to delay foreclosures by 45 days, and the 60 days are up now.

Even with low rates, which drove refinancing to a 5½ year record last week, are no help for homeowners who are under water.

In energy, oil fell on reports of large stockpiles.

In currency, the dollar was mixed, and the Ruble was devalued again on reports of a continued impasse in the Russia/Ukraine spat.