Retail sales and exchange traded funds (ETFs) took another hit today.

The Commerce Department reported that the numbers were down by 0.6% – much worse than the expected 0.2%. The slow sales affected all corners of the market, from autos, furniture and appliances, reports Martin Crutsinger for the Associated Press.

Consumer spending makes up 71% of global domestic product (GDP), so even a slight slowdown can be felt in other parts of the economy.

Advisor Perspectives talks to Craig Johnson, CEO of Consumer Growth Practices, who remarks that while the economy has clearly softened, and housing and financial services have receded, the GDP is still not in negative territory and is not a disaster.

Johnson contends the consumer is still alive and healthy, just a bit more cautious about how much they are spending.

The numbers lag slightly and the definitions can be off. The reporting of e-commerce data is behind by a month, meaning that holiday sales reports leave out the 7% revenue from online shoppers – the fastest-growing segment.

The only reliable metric these days, according to Johnson, is an inverse relationship to the price of gasoline: as fuel prices go up, consumer sentiment goes down and vice-versa.

Retail ETFs are down in intraday trading and are off so far this year:

  • Retail HOLDRs (RTH), down 6%
  • SPDR S&P Retail (XRT), down 8.9%
  • Consumer Discretionary SPDR (XLY), down 6.9%

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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.