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Brian Wesbury
Chief Economist
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Bob Stein
Deputy Chief Economist
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 | Retail Sales Rose 0.7% in November |
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| Posted Under: Data Watch • Retail Sales |
Implications: Remember all the pundits screaming that the partial government shutdown was going to kill the consumer? Well, today we got another blowout report on retail sales. Including large upward revisions for October, over the past two months sales are up at an 8% annual rate, the fastest 2-month gain in more than a year. November sales gains were led by autos, but also bolstered by non-store retailers (internet & mail-order), restaurants/bars, and building materials. Rather than being depressed, consumers look downright festive. The largest drop in sales was at gas stations, which is likely due to lower gas prices and so not a reason to worry. "Core" sales, which exclude autos, building materials, and gas, rose 0.6% in November and are up 17 straight months. Plugging today's retail numbers into our consumer spending model suggests "real" (inflation-adjusted) consumer spending on goods and services combined will be up at a 3 - 3.5% annual rate in Q4, the fastest pace in three years. Real GDP growth might come in at only a 1% rate, due to a large drag from inventories, but final sales ( GDP excluding inventories) should grow in the 2.5 – 3% range. In other news this morning, new claims for unemployment insurance spiked up 68,000 last week to 368,000. It's hard to seasonally adjust claims around holidays, so look for a large drop next week. Continuing claims for regular state benefits increased 40,000 to 2.79 million. It's early, but our current outlook for December payrolls is a gain of 149,000, both nonfarm and private. On the inflation front, all remains quiet. Import prices declined 0.6% in November and are down 1.5% in the past year. All the drop in import prices in November was due to oil; ex-petroleum import prices were up 0.1% in November, although still down 1.2% from a year ago. Export prices increased 0.1% in November, both including and excluding agriculture. Still, overall export prices are down 1.6% in the past year and down 1% excluding farm products. Inflation won't stay this dormant in the year ahead.
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These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
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