05/16/2009 08:45 am ET | Updated May 25, 2011

Are Retail Sales Bottoming?

The latest retail sales news was followed by a fairly bearish commentary. However, I disagree with this sentiment for the following reasons.

Here is a chart of the month and year over year percentage changes

The month to month percentage change dropped hard in the last quarter of last year. However, the month to month rate is now moderating and is clustering around 0%.

Above is a chart for the month to month percentage change in durable goods purchases. Notice the large drop off at the end of last year in the fourth quarter. However, we saw a jump in January followed by two months of declines. But the overall level in the first quarter was higher than the 1st quarter of last year. In addition, the overall 6-month trend is higher.

For non-durable goods purchases, notice that 5 of the last six months have clustered between the $2.320 and $2.340 trillion level.

Finally, consider these charts from

The percentage of people who think the economy is getting better is increasing. This number has been increasing since late February.

The percentage of people who think the economy is poor is decreasing and the number of people who think the economy is fair is increasing.

The percentage of people who think the country is on the right track is increasing.

These charts indicate the public mood is clearly changing for the better which at a minimum will provide a floor on consumer sentiment.

Let me make clear: I don't think we're going to have a gangbusters, consumer led recovery. The US consumer still faces a weak job market, massive debt and a big destruction in his wealth over the last few years. This is not an environment where people will go out and spend. However, I do think that the overall trend of durable, non-durable and retail sales numbers indicates the decline is moderating and we will see a clear bottom over the next 4-6 month