Seattle Times writer Melissa Allison seems a bit too excited about today’s report that retail spending in Washington State grew by 10.5% from spring ’05 to spring ’06.
Those were the days, back in the spring when the flowers bloomed and the housing market sizzled.
Washingtonians had such confidence last spring that they spent with abandon on computers, hotel rooms, jewelry and other items.
They spent 10.5 percent more than they had a year earlier, the largest increase for taxable retail sales in Washington since 1990, according to April-to-June data released Monday by the state Department of Revenue.
Rising gas prices didn’t wreck the mood and are not included in the retail-sales data.
Economists say the spending has calmed since then, doused by a slowdown in the housing market and slower employment growth.
…
The state’s economic growth and therefore the spending are propelled by employment gains, particularly in high-wage sectors such as aerospace, software and construction, Sohn said.
So, the spending is “propelled by employment gains,” but when it “calms” it’s because of a slowdown in the housing market? What a delightful contradiction. I fail to see how a 10.5% retail spending increase can be attributed to “employment gains.” Were 10.5% more jobs added? Did everyone get a 10.5% raise? Smells like false assertion to me. I think it’s much more likely that the spending increase is primarily the result of home equity extraction and a declining savings rate.
Maybe it’s just me, but the news that people are spending increasingly more as incomes stay practically flat doesn’t seem like something to celebrate.
(Melissa Allison, Seattle Times, 10.31.2006)