A lot of numbers coming out these days, most all of which are scary. Trying to tell how scary things are, and what is actually going on, is really difficult.

Case in point. Comments recently on the drop in imports from my favorite China econ guru (i.e. I read his blog religiously) Michael Pettis:

This is frankly much more worrying to me than the decline in exports because it suggests that demand in China is contracting quickly. I have no idea what the retail sales numbers are going to say, but last month I complained that it seemed inconsistent to me that imports were contracting while retail sales were implying a healthy expansion of consumer demand. Unless the marginal propensity to import is collapsing, I think I trust the import numbers more. Demand in China is looking very bad.

This is completely logical of course. Drop in imports means a decrease in demand. A scenario by which for some reason import demand slackens yet domestic demand remains stable is possible theoretically, but is certainly not likely. Price/currency changes perhaps, a hugely successful "Buy China" movement? (the latter is partially tongue-in-cheek, but only partially)

Retail figures for September and October showed increases in the low 20 percent range. Strange. With the recent drop in import demand, we would expect some sort of similar movement on the domestic demand side.

Last Friday. Retail sales numbers came out.

Wait for it.

20.8% increase.

I don’t get it. I am anxiously waiting for Pettis to give us some free education here and explain what is going on. In the meantime, do I pass on the numbers to my franchise and retail clients or play it conservative and see what happens next month? (I’m inclined towards the latter.)