Home Logon FTA Investment Managers Blog Subscribe About Us Contact Us

Search by Ticker, Keyword or CUSIP       

Blog Home
   Brian Wesbury
Chief Economist
X •  LinkedIn
   Bob Stein
Deputy Chief Economist
X •  LinkedIn
  Retail Sales Rose 1.3% in October
Posted Under: CPI • Data Watch • Government • Inflation • Retail Sales • Fed Reserve • Interest Rates • Spending • COVID-19
Supporting Image for Blog Post


Implications:  Another report showing the US is not yet in a recession. Retail sales boomed in October, rising 1.3%, increasing by the most in eight months, with upward revisions to prior months, as well.  Nine of thirteen retail categories grew in October, led by sales at gas stations and autos, rising 4.1% and 1.3%, respectively.  However, we don’t expect gains of this size to continue.  Much of the increase at gas stations was due to higher prices at the pump, while some of the increase for autos was due to the replacement of storm-damaged cars.  Perhaps the best news in the report was that “core” sales, which exclude the most volatile categories of autos, building materials, and gas stations, rose a strong 0.9% in October and was revised higher for prior months.  These sales are up 7.9% from a year ago.  The problem is that one of the key drivers of overall spending is inflation.  Yes, consumers are spending more, but they are not taking home the same amount of goods.  Although overall retail sales are up 8.3% from a year ago, that pace is just barely outpacing inflation, with the CPI up 7.7% over the same period.  Due to very loose monetary policy and the massive increase in government transfer payments in response to COVID, retail sales are still running higher than they would have had COVID never happened.  However, loose monetary policy, which helped finance that big increase in government spending, is translating into high inflation, which is why “real” (inflation-adjusted) retail sales are just slightly higher versus a year ago.  This doesn’t mean overall consumer spending is down; “real” (inflation-adjusted) spending on goods and services is still rising.  But it does mean overall real consumer spending growth is softer than the headlines suggest. What to expect in the months ahead?  Retail sales will struggle to keep pace with inflation while overall consumer spending increases modestly due to the service sector, as consumers shift their preferences away from goods and back to services.  Ultimately what the data show is that the Federal Reserve needs to stay the course and continue to tighten monetary policy.  In other news this morning, import prices declined 0.2% in October while export prices fell 0.3%.  Still, in the past year, import prices are up 4.2%, while export prices are up 6.9%.

Click here for a PDF version

Posted on Wednesday, November 16, 2022 @ 11:07 AM • Post Link Print this post Printer Friendly

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.
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
Follow First Trust:  
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
Home |  Important Legal Information |  Privacy Policy |  California Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2024 All rights reserved.