This morning both March PPI and retail sales were released. The PPI was more negative than anticipated, suggesting a negative CPI tomorrow (Deflation is Here!).

Retail sales are more interesting. I've written several pieces about consumers coming back from the grave. At first blush, the March numbers seem to contradict what we saw from Shoppertrak re mall sales; and also same store sales, and to a very limited extent, auto sales -- all of which showed some improvement.

Retail sales were off -9.4% YoY. Ex-auto they were off ~6.0% YoY. A closer look suggests (1) Easter falling one week later in April may have much to do with the decline; and (2) almost all of the decline is in auto and gasoline sales.

Total retail sales from a year ago fell from 380.2 to 344.4. Almost all of that decline was autos, down from 67.0 to 49.7; and gasoline, down from 42.3 to 27.9.

Regardless of whether the economy as a whole begins to improve, the malaise of working and middle class America will not be relieved until wages increase, and employment rates return to a robust level.
The news on that score is grim. Unemployment is a lagging indicator. Historically, it continued to rise right through to the end of recessions. The "jobless recoveries" from the 1990 and 2001 recessions were even worse: unemployment continued to rise for over a year after both recessions ended!
If that pattern is again true for any recovery from this recession, the forecast is grim indeed.

On this Easter/Passover weekend while we are enjoying the blossoming of spring, Robert Reich has a blog post that nicely encapsulates a debate percolating through the econoblogosphere:

[W]e're not at the beginning of the end. I'm not even sure we're at the end of the beginning. All of these pieces of upbeat news are connected by one fact: the flood of money the Fed has been releasing into the economy.... The real question is whether this means an economic turnaround. The answer is it doesn't.

The only economic fundamental that's changed ... is that so many people got so badly burned that the trust necessary for consumers, investors, and businesses to repeat what they did then has vanished.
....

I spent the better part of an hour yesterday evening debating Larry Kudlow on his CNBC program, along with Arthur Laffer and two other financial analysts, all of whom were sure that the stock market had hit bottom and was now poised for a major recovery. I admire cockeyed optimism, and I understand why Wall Street and its spokespeople want to see a return of the bull market. Hell, everyone with a stock portfolio wants to see it grow again. But wishing for something is different from getting it.

In other words, the "green shoots" side and "dead of winter" side are polar opposites, and never the twain shall meet.

Not so. As it happens, there's good reason to believe that both sides are right.

This may be the most important economic graph of the year:

Why? The above graph shows gasoline consumption in the US. The dotted blue line is April 2007-March 2008, the yellow line the remainder of 2008, and the chained red line this year's consumption.

Let us make a not unreasonable assumption that this recession is going to be somewhat "L" shaped or at least a Verizon-logo like elongated "V" with a very slow recovery after hitting bottom. Let's also assume optimistically that we are somewhere near the bottom of the cliff -- the inflection point of the "L" or "V".

How much of a recovery we get -- or worse, if we get a double-dip "W" recession -- is likely to be substantially determined by the price of Oil later this year.

I am not sure who first coined the phrase "House of Cards" to describe the financial crisis that we are facing today. There was a brief piece on "60 Minutes" called House of Cards: The Mortgage Mess and a really good book by William Cohan titled "House of Cards: A Tale of Hubris and Wretched Excess on Wall Street". We are left to deal with this ponzi scheme created by financial conglomerates, mortgage industry and to a lesser extent borrowers who lied about their incomes. But the ways we are dealing with this crisis, particularly Treasury Secretary Geithner's Private-Public Investment Program (PPIP), we are just reshuffling the "House of Cards". We are just re-spreading the risk of the "toxic assets" created by the financial conglomerates to different players including us (again).