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[Thomas Beckett <thomas AT tbeckett.com>]

Tony Spencer wrote:
> The Commerce Department said retail sales rose an unexpectedly sharp 1.8
> percent in March to a seasonally adjusted $333.01 billion, the biggest gain
> since March 2003. Excluding cars and trucks, sales gained 1.7 percent, that
> category's best performance since March 2000.

Is gasoline included in retail sales?  I dunno.

Fact is, those retail sales are built on top of a housing bubble that 
may be about to burst.  The "recovery", such as it is, has been 
supported by consumer spending.  Where are consumers getting the cash? 
By doing cash-out refinances of their homes and rebuilding their credit 
card debt.

Also, demand for housing, fueled by low interest rates, has grown so 
much that home prices are increasing dramatically -- arguably above the 
value of the property.  This trend is even more pronounced in certain 
metropolitan areas.

http://www.washingtonmonthly.com/features/2004/0404.wallace-wells.html

Problem is that interest rates can't really get any lower.  The 
burgeoning federal debt is creating pressure for rates on U.S. Treasury 
debt to go up.  (It is also causing a weak dollar which is increasing 
the cost of oil to us, but that's for another day.)  When the fed rates 
go up, so will all of those ARMs.  It may take a year or two, but people 
will find themselves with higher interest payments (on higher principal, 
thanks to the cash-out refi), and no more disposable income with which 
to support the economy.  If the housing bubble bursts, people may find 
themselves saddled with a mortgage principal higher than what they can 
sell their home for.

In the business segment of the economy, manufacturers' shipments, 
inventories and orders increased by a whopping 0.3%  That's the field of 
making stuff and selling stuff (and employing people to do that).

http://www.census.gov/indicator/www/m3/index.htm

Mmm, lots of job growth in our future!

And here's a good one:

"Private wage and salary disbursements increased $21.0 billion in 
February, compared with an increase of $29.3 billion in January. 
Goods-producing industries' payrolls increased $3.6 billion, compared 
with an increase of $7.3 billion; manufacturing payrolls increased $3.2 
billion, compared with an increase of $4.0 billion.  Services-producing 
industries' payrolls increased $17.4 billion, compared with $22.0 billion."

http://www.bea.gov/bea/newsrel/pinewsrelease.htm

Whatever increases in wages that people are enjoying from the so-called 
recovery are declining dramatically.  The "recovery" seems to be 
levelling off.

So again in conclusion, I congratulate George W. Bush, now for 
controlling inflation by keeping a tight lid on consumer disposable 
income and manufacturing activity.

TaB