More from the one, the only, Howard Davidowitz…
Optimists cheered Thursday’s stronger-than-expected March sales at retailers such as Kohl’s, Nordstrom, The Limited and even Gap as further proof of an improving economy and rebounding U.S. consumer. In fact, Thomson Reuters’ Same-Store Sales Index rose 9.1% last month to the highest level in the index’s 10-year history.
“The numbers were very strong,” admits noted cynic Howard Davidowitz of Davidowitz & Associates. “There are some positives” in consumer spending, even after adjusting for the boost many retailers got from Easter being earlier in April this year vs. last.
But (you knew that was coming, right?), Davidowitz believes it’s a “sucker’s rally” in retail stocks and any rebound in consumer spending will be short lived. “We’re in a bad place, heading for a worse place,” he says.
Regarding today’s chain-store sales data, the veteran analyst notes huge retailers were excluded, most notably Wal-Mart. “When you look at comp retail sales they don’t include the giants, they include some little dinky apparel chain doing a billion-five [in sales] and these analysts are dancing in the street.”
Furthermore, retailers such as Macy’s and Target warned the big jump in March sales would likely take a bite out of results in April, while Abercrombie & Fitch was a notable laggard in March; the Retail SPDR was essentially flat at midday.
More importantly, Davidowitz says the financial condition of the country is in “dramatically worse shape” than it was a year ago, when he was making dire predictions about America’s future.
With “no real jobs growth…deficits gone mad” and prospects for higher taxes for all Americans, Davidowitz is “exactly in the same place” as a year ago, despite the economy’s apparent revival. “There’s clearly pent up demand – there are needs [and] the consumer is jumping on those needs,” he says. “We’re in a cyclical economy. That doesn’t mean we’re better off.”
As hinted in the accompanying video, Davidowitz is highly critical of the Obama administration and predicts big political changes for America, as we’ll discuss in more detail in a forthcoming segment.
Business Insider Emails & Alerts
Site highlights each day to your inbox.