Old Man Cap

Today, Census Bureau data came out detailing the year-on-year changes in retails spending. It was the worst year they have on record, a real decline of over 11% in retail sales nationwide in 2008.
Calculated Risk: Retail Sales Collapse in December

So, I blogged awhile ago that we were entering just the eye of the storm and we’d have another hard rocky time ahead of us. That rocky time begins now. The initial part of the recession was due to the bubbles bursting, financial and housing. Those bubbles kicked in and are starting to drag down the rest of the economy now. As victims of the above bubbles, everyone has tightened how they spend money (and actually save it instead – can you imagine?!). Not only retailers but especially lenders and creditors. No one is spending money any more, or is able to get money in the first place. As more and more jobs are lost as a result of Part 1, this will go even further and drag us down quite a bit to the full extent of this recession (potentially even depression [classified as a -10% change in GDP]).

While the market realized this was going on, it never really quite sinks in until official data comes out (albeit too late). Today, and even last week with its unemployment numbers, are the signals of Part 2 of this recession. Let’s see how far it drops. During then, keep safe.