Home Logon FTA Investment Managers Blog Subscribe About Us Contact Us

Search by Ticker, Keyword or CUSIP       
 
 

Blog Home
   Brian Wesbury
Chief Economist
 
Bio
X •  LinkedIn
   Bob Stein
Deputy Chief Economist
Bio
X •  LinkedIn
 
  Retail Sales Rose 1.7% in October
Posted Under: Data Watch • Government • Inflation • Retail Sales • Spending • COVID-19
Supporting Image for Blog Post

 
Implications: Retail sales continued to show strength in October, beating consensus expectations and rising 1.7% for the month.  Some of the gain was due to inflation, but not all of it: consumer prices rose 0.9% in October, not 1.7%.  The sales gains were broad, with eleven of thirteen major categories up in October, led by non-store retailers, autos, and gas stations (more miles driven and consumers paying much higher prices at the pump). Overall sales are up a robust 16.3% from a year ago.  Another way to look at it is that sales are up 21.4% versus February 2020, which was pre-COVID.  "Core" sales, which exclude the most volatile categories of autos, building materials, and gas station sales, rose 1.3% in October, are up 15.4% from a year ago, and up 20.7% versus February 2020.  In other words, due to the massive increase in government transfer payments in response to COVID, retail sales are running much hotter than they would have had COVID never happened, even as the level of output (real GDP) is still running lower than it would have been in the absence of COVID.  It has not been an even recovery for all major categories, though.  For instance, non-store retailers (+39.8%) and sporting goods stores (+39.5%) have grown significantly faster than overall retail sales since February 2020.  The last category of sales to get above February 2020 levels was restaurants & bars, which finally moved into the green in April and are now up 9.4% from 20 months ago.  Looking ahead, given that overall retail sales are still far above the pre-COVID trend, we expect a modest trend decline in the year ahead.  However, as long as policymakers don't panic again about COVID, we also expect sales at restaurants & bars to buck that trend and move higher, along with sales of services not counted by the retail trade report, as America gets back toward normal.  In the months ahead, the path of retail sales will be a battle between a number of opposing factors.  Rising wages, jobs, and inflation will all be tailwinds for retail sales, while the waning of the temporary and artificial boost from "stimulus" checks along with the end to overly excessive jobless benefits will be headwinds.  In other news this morning, import prices rose 1.2% in October while export prices increased 1.5%.  In the past year, import prices are up 10.7%, while export prices are up 18.0%.  These figures add to the evidence that the Federal Reserve is too loose.

Click here for a PDF version
Posted on Tuesday, November 16, 2021 @ 10:52 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.