Here's the headline argument made by the media...

Dec. 11 (Bloomberg) -- Sales at U.S. retailers rose more than forecast in November, a sign consumer spending is gathering speed heading into 2010.

Really?

Gallup says otherwise, actual POS data says otherwise, at least with regard to Black Friday.

So what's going on here?

Well we could start with this, that Bloomberg, by the way, didn't report...

Special Notice - The advance estimates in this report are the first estimates from a new sample. The new sample for the Advance Monthly Retail Trade Survey is selected about once every two and a half years.

Oh, so the sampling has changed? Uh, doesn't that make for a somewhat-difficult argument that we're measuring apples to apples?

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for November, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes,

What's more expensive this year than last (since y/o/y is the more accurate measurement in general, as it nulls errors in seasonal adjustments.)

Gasoline: 33,303 .vs. 31,411. Big change - that's roughly six percent in one month! Annualized it is a roughly 10% change - gas was more expensive, basically, and most gasoline demand is inelastic (gotta get to work!)

There are some other problems evident in the data. Non-store retailers were up significantly, but there is no current-month data for online broken out, and somehow there's a bunch "missing" for the last month where the monthly breakout IS present.

On its face it looks like a good report. However, the sampling change along with some of the missing internal sub-sets for the current month make it nearly impossible for me to evaluate whether we're seeing broad-based strength on an actual basis or whether gasoline and sampling revisions are responsible for most of it.

I'm deeply skeptical of these numbers, mostly because the other data available that I've cited in recent days - the Gallup Survey, the actual POS data stream analysis, and ShopperTrack's latest - all say that Black Friday was down modestly (or worse.)

Was the front of the month that much better on "hope and change" only to get blown to bits over the Thanksgiving Holiday? I don't buy it and thus far the preponderance of the evidence does not point toward a broad-based consumption recovery.

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Tax Change Boosts Regulatory Capital For US Insurers

NEW YORK, Dec 10 (Reuters) - U.S. insurance regulators have approved an accounting change to temporarily give insurers the ability to use future tax benefits to boost regulatory capital, despite the protests of consumer groups who say the change could hurt policyholders.

The measure, approved by the National Association of Insurance Commissioners (NAIC) at a quarterly meeting earlier this week, allows life and property-casualty insurers to count billions of dollars of deferred tax assets as regulatory capital through the end of next year.

Life insurers in particular had been clamoring for the change, eager for ways to boost capital after the sector was badly hit by the credit crisis. Regulators approved the measure 11 months after voting against it and other measures that would have provided capital relief. [ID:nN29312912]

"Insurance regulators have long understood the need for conservatism in insurer's financial statements," said NAIC President Roger Sevigny, in a statement. "This change recognizes that fact, but also recognizes that overconservatism can actually be detrimental to consumers."

Insurers had already been given several other forms of capital relief, including an adjustment to capital charges for mortgage-backed securities.

Consumer groups such as the Center for Economic Justice and the Consumer Federation of America opposed the measure, saying it allows insurers to count more non-liquid assets as regulatory capital, potentially undermining consumers who bought insurance from these companies.

David Havens, an analyst with Hexagon Securities, said it would have been better if regulators had required companies to find more tangible ways to boost capital. "Simply changing regulations is not a way to strengthen capital for the industry, it is a little bit artificial," he said.

The American Council of Life Insurers, which had recommended the change to regulators more than a year ago, calculated the benefit to life insurers alone could be $11 billion. The ACLI represents 340 U.S. life insurers including MetLife (MET.N), Prudential Financial (PRU.N) and Hartford Financial (HIG.N).

The accounting change also has the potential to be significant for companies that sell non-life insurance, including American International Group Inc (AIG.N) and Travelers Inc (TRV.N), which provided comment to an NAIC group that drafted the statutory accounting change.

The NAIC-approved measure is more conservative than had been lobbied for by the ACLI, and contains certain limitations.

Howard Mills, a chief adviser within the insurance group at Deloitte and a former New York state insurance superintendent, said it was unlikely regulators would need to extend the capital relief beyond next year.

"They have done a good job of threading the needle," said Mills, of the measure reached by the NAIC.

In order to count deferred tax assets toward the calculation of regulatory capital, insurers have to be more than likely to realize the tax benefit within three years, and it is limited to 15 percent of surplus.

"With this improvement, insurers can have greater access to capital and credit, which is essential to serving current and future policyholders," said the ACLI's chief actuary, Paul Graham.