The economy: Sales are down and the Dow is up

At lunch today, I turned on CNBC as the Dow briefly passed 10,000. It occurred to me that the economy is giving off more mixed signals these days than an evening of speed dating.

Example: Today’s optimism was driven by a better than expected decline in retail sales in September. That’s right: Retail sales went down and the Dow went up.

What happened is that analysts got a little giddy after the took automotive sales out of the mix and found that  retail sales went up by ½ of one percent. They now think the consumer is ready to spend again. But look a little further and what do you find? Consumers are spending more on food and gasoline. I got news for you: Food and gasoline are necessities.

Meanwhile, sales of pretty much everything else, including electronics, furniture and appliances – the big-ticket, discretionary items that drive the economy – are still in reverse.

Another set of numbers, a little less flashy than Dow 10,000, also caught my eye today. Those are the global trade figures collected every month by Panjiva. They tell a different story about the consumer.

The number of companies shipping goods from overseas to the United States was down by 5% from August to September.

The number of US companies bringing goods into the country also dropped by about 5%.

The total number of shipments into the US from abroad was down about 6%.

Those numbers reflect what business is thinking about the economy in the near future. That’s because the inventory that gets delivered in August and September will be available for sale during the holiday season. Based on the above, the shelves will be lean. “When I look at the data, I see that companies are being cautious about how much inventory they are piling up for the holiday season,” says Josh Green, Panjiva’s CEO. “They’re looking at consumers and saying we don’t really know if consumers are going to spend, but we got burned last year and we’re not going to get burned again.”

This is not a doomsday scenario. Green follows this stuff and based on his data, global trade hit bottom in February and has been crawling back ever since. Crawl is the operative word: The latest figures suggest to him that the economy is still not ready to run. “We’re still not at the levels we were at pre-crash, and anyone hoping that this holiday season was going to be a blockbuster is going to be disappointed,” Green says. “The business community is not banking on it.”

I don’t know about you, but I’m not impressed that consumers bought a few more bags of chips or put a little more gas in the tank last month. I’ll believe the consumer is ready to spend again when I see my friends, family and neighbors buying new washing machines, sofas and flat screen TVs.

Green agrees with that analysis. “I was talking about this to a friend the other day,” he says. “Until something comes along that breaks the dynamic we’re in, we’re going to continue to crawl.” Even if the Dow does hit 10,000.