From yesterday's DR. "--What about retail? Harvey Norman shares...

From yesterday's DR.
"--What about retail? Harvey Norman shares fell 6% yesterday-and that was after the company reported that sales were up 3.8% over the last twelve months to $6.03 billion. The devil was in the details. Same-store sales growth was up 1.4% in the fiscal year, compared to 4.4% growth the year before. And the overall sales growth rate was down over 50% from the 8.7% rate the year before.

--Is that nit picking? Growth is growth isn't it? Shouldn't any increase in sales be a tribute to what Access Economics calls "the remarkable resilience of Australia's mums?" Isn't confidence the most important thing in a consumer economy?

--The Access analysis has to be one of the stupidest pieces of economic analysis we've ever read. As if Australian mums will manage to defy the necessities of reduced consumption in a balance sheet recession to return the nation's economy to a pre-bust glow. Absurd. Confidence matters. But whether you have money to pay your bills or buy a new DVD player matters more.

--Our guess is that retail figures are going to suffer as households shift their mindset from spending to saving. We're talking about a sea change in consumer behaviour, not a cyclical rebound from an ordinary recession. You may disagree. But if this is a balance sheet recession and not just a garden-variety recession, households will gradually reduce debt, use fewer credit cards, and begin to live beneath their means again."

MM. my thoughts too.