The U.S. Department of Commerce reports that total retail sales in the U.S. slowed for the second month in a row during March, rising only 2 percent compared to the same month a year ago.
Worse yet, gasoline sales — the price of which has been rising — accounted for almost the entire increase.
Automobile dealerships took the biggest hit, with sales at the nation's big three auto makers falling a whopping 17.6 percent in March compared to the same month a year ago. Sales at retailers of home furnishings declined 7.1 percent, while sales at electronics stores actually rose 1.2 percent as consumers took advantage of big discounts on items such as big-screen TVs.
More importantly, my research indicates that, after adjusting for inflation, retail sales actually fell 1.6 percent during March — the fourth consecutive month during which inflation-adjusted retail sales declined.
With most leading economic indicators pointing south, and the purchasing-power of the U.S. dollar continuing to decline, I expect real retail sales to fall throughout the remainder of 2008.
I also expect corporate profits at U.S. companies to fall sharply this year.
General Electric recently lowered its full-year 2008 earnings guidance after reporting that its net profits fell 5.8 percent (on a year-over-year basis) during the first quarter of 2008. Earlier in the week, aluminum producer Alcoa reported that its first quarter profits declined by more than 50 percent compared to the same period a year ago.
Meanwhile, package delivery company UPS significantly reduced its first-quarter earnings forecast due to the ongoing economic slowdown, persistently high fuel costs, and a recent reduction in the company's domestic package volume.
Not surprisingly, the useless "analysts" on Wall Street once again lowered their projections for first-quarter earnings at S&P 500 companies last week. Thus far, those so-called "experts" have cut their earnings forecasts every week since the beginning of this year.
I, on the other hand, began warning our readers about a slowdown in corporate profits as far back as July of last year and have since written several articles on this topic — see my commentaries written on July 11 and Oct. 9 2007, as well as an article entitled "Cheap Stocks? Think Again!" that I wrote on Jan. 3, 2008.
But, please don't think I'm trying to toot my horn! Rather, I'm just trying to emphasize that you'll rarely, if ever, make substantial profits in the financial markets by listening to the self-serving clowns on Wall Street.
In fact, the exchange-traded funds (ETFs) that I've recommended to subscribers in my investment newsletter, The ETF Strategist, have done quite well since we introduced this monthly newsletter in September.
Despite a difficult market, our Conservative Portfolio recommendations have returned 5.5 percent since Sept, 18, 2007, while our Aggressive Portfolio has returned 14.9 percent (through last Friday's close).
In comparison, the S&P 500 Index has returned a negative 8.7 percent during this same period.
If you'd like to sign up for a risk-free trial subscription to The ETF Strategist, Go here now.
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