October Retail Sales: Consumers: 'We're Not Dead Yet!'

– by a New Deal Democrat

Retail sales, my favorite consumer indicator, were reported this morning for October. And it was a good number, up +1.3% nominal and up +0.5% after adjusting for inflation:

On the other hand, it was the highest absolute number since April. On the downside, retail sales have yet to go anywhere over the past 18 months.

As a result, retail sales rose by just +0.5% year-on-year. Since annualized real retail sales have an excellent historical record of matching the coming recession, here they are historically from 1997 to 2019, compared to real total wages for non-supervisory employees, another excellent matching indicator (gold) and also real personal expenditure on an annual basis (red):

The latter historically lags somewhat, but is included because there is an excellent case that this year consumers have shifted from spending on goods, which is more reflected in retail sales, to spending on services, which is better reflected in the personal series incomes . Here are the three up close for the past year:

Real retail sales were negative for several months in the spring, coinciding with negative real GDP reports for Q1 and Q2, but have since turned slightly positive. As I noted the other day, real aggregate wages remain positive – though certainly not strong; and real personal consumer spending is still fairly stable.

Bottom line: no recession yet.

Since real retail sales have also historically been an excellent short-term indicator of wages, here’s this past year comparison, along with real personal spending as well:

While this month’s retail sales report was very good, it still continues to suggest further weakening of the jobs report in the coming months.

So, a good report, but one that doesn’t change the underlying slowdown trends.

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *