This morning's release of August retail sales signaled good things for the economy most specifically because discretionary buying was positive. The overall number was not too much of a surprise given auto sales and the run-up in gasoline prices. But general merchandise store sales were up 1.6%, clothing store sales were +2.4% and sporting goods, hobby, book & music stores saw sales increase 2.3%. As the chart below indicates, this is the first solid monthly gain for all three categories since the recession began. There are always some quirky seasonals and weather issues that can front load, at this time of year, back-to-school sales. Because incomes continue to be squeezed and jobs are still being lost, one should be cautious about putting too much optimism into one number. Nevertheless, a plus is better than a minus and underscores that, at the very least, the world isn't still coming to an end. The greater economic challenge, if all this is going to work out in a sustainable manner, is for domestic production to feed domestic demand. To this end, the tire tariff is only the opening shot to protracted negotiations to create more balanced trade.