CHART OF THE
DAY YEAR....Consumer spending has fallen off a cliff:
Dragged down by plummeting automobile sales, retail sales fell by a record amount in October, the Commerce Department reported on Friday.
....Sales of cars and auto parts plunged 23.4 percent from last year, the Commerce Department said....Sales of furniture and home-furnishings fell by 13.5 percent compared with 2007, the latest report said, and Americans also spent less money at retailers who sell home electronics, appliances and sporting goods, books and clothes.
The chart below, from Calculated Risk, shows the numbers adjusted for inflation (in blue). Those are the ones that count. Just as it's ridiculous to say that "spending at gasoline stations dropped sharply," as if that's meaningful (people didn't buy less gasoline, after all, they merely benefited from lower prices), it's also ridiculous to claim that overall retail sales were down 4.1% from last year when they were really down nearly 9%. Like it or not, that's a much better indication of how much actual stuff people were buying. (Or not buying, in this case.)
Anyway, Paul Krugman's $600 billion stimulus is looking better all the time. I'm still unsure what to think about an auto industry bailout (though leaning against), but the argument against a broad fiscal stimulus is pretty much nonexistent now. Congress needs to get moving.