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From the Rosenberg files:

We know that the whole end-of-recession theme comes from the auto sector — inventory building on the production side and a “successful” Cash-for-Clunkers program on the sales side. But the problem with Cash-for-Clunkers is this — you actually have to buy a new vehicle. The problem with this is that when organic income is declining at a record rate, the cupboards are bare in terms of buying power for other goods and services, and hence the 0.6% slide in excluding auto retail sales in July.

Now we are seeing horror stories when it comes to the back-to-school season — have a look at Retailers See Slowing Sales in Key Season on the front page of the Saturday NYT. As it turns out, Citigroup analysts are forecasting the softest back-to-school sales performance this year — a decline, the first time since their poll began in 1995. They see August-September coming in at down 3.0-4.0% compared with +1.0% in 2008 when everyone seemed to believe the world was coming to an end. The National Retail Federation is forecasting that the average family will spend 8.0% less this year and ShopperTrak is seeing traffic down somewhere in the order of 10.0%. While some claim that timing is an issue — sales have been deferred by August sales tax holidays in many states — that fails to address why these surveys are so week and the same for the surprising decline in the University of Michigan consumer sentiment to start out the month.

Another study by research company IBIS-World, found that every category of back-to-school shopping, save for notebooks and pencils, will be lower this year when benchmarked to the 2008 season. Clothing -5.4%; footwear -4.4%; electronics -1.8%. Things are so tough that Google reported that searches for coupons are up 40% this year and searches for buy-one-get-one-free deals have risen by 30%.

Matthew Katz (see Friday’s NYT, page B6), Managing Director at a retail research firm called AlixPartners, said that based on his company’s findings, “some 65% of Americans plan to modify spending beyond just this year.” As we said previously, secular trends, especially in terms of how they relate to social change, are measured in years, not quarters.

Source: The other GS