Many people are pointing to the November retail sales report to argue that we are well on our way to recovery, even types that have previously shown a healthy dose of skepticism. However, that report did not square at all with private data or analyst summaries, so I have been very suspicious.

At Barry Ritholtz’s blog they have a complete evisceration of the report and clearly show it is too early to celebrate yet.

Regardless of the actual revenue generated, I have repeatedly cautioned people to hold off on forming an opinion until we get a good look at margins. There is deep discounting and price deflation is picking up steam, which is squeezing margins to unsustainable levels. I didn’t know that the government estimates of revenue didn’t take price changes into account, which makes the report nearly useless at present.

Far from expecting an increase in demand reflective of a recovery, major players are clearly fighting to reduce their margins as much as possible in order to destroy the competition. This is going to exacerbate the commercial real estate crunch and joblessness for some time; although I don’t think this is a bad development in the long term because we clearly have excessive retail investment that needs to be purged.

Needless to say, I expect another “unforeseen” downturn in the coming year or two.

Update: Gallup: Self-reported consumer spending was down more than 20% in each of the last three weeks from last year’s depressed weekly comparables.