Implications: The Plow Horse economy has officially picked up her gait! Retailers capped off the strongest year of sales since 2012 on a high note with another solid month of sales in December.  Retail sales rose 0.4% in December, coming on the back of a 0.9% gain in November, a 0.7% gain in October and a 2.0% surge in September!  In contrast to September and October, when the rise in spending was led by autos, as people replaced vehicles destroyed in Hurricanes Harvey and Irma, the gain in December was broad-based, with 9 of the 13 major categories showing gains.  Non-store retailers (internet and mail-order) led the charge higher followed by restaurants & bars.  Non-store retail sales grew by 1.2% in December, and now make up 11.2% of retail sales, the largest share ever. More great news today was the considerable strength for "core" sales, which exclude volatile categories (autos, building materials, and gas).  Core sales grew 0.4% in December, but including prior months' positive revisions were up 0.9% and are up 5.4% from a year ago.  Although conventional wisdom argues that traditional retailers are in trouble because of the Internet, this is an overly pessimistic view.  Traditional retailers are not sitting still.  They are learning how to compete in today's new world.  Jobs and wages are moving up, consumers' financial obligations are less than average relative to incomes, and serious (90+ day) debt delinquencies are down substantially from post-recession highs. As a result of all of today's data, our model for GDP suggests a real GDP growth rate around 3.0% in the fourth quarter. 

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