Implications: The US consumer is on a roll. Retail sales increased for the tenth straight month in April – the longest winning streak since the late 1990s – and are up 7.6% versus a year ago. Including upward revisions for prior months, overall sales were up 1.1% in April and 1% excluding autos. This was not all fueled by higher gas prices. Not even close. "Core" sales (which exclude autos, building materials, and gas) were up a solid 0.5% including upward revisions to prior months. Even if these sales are completely unchanged for the rest of the second quarter they will still be up at a roughly 4% annual rate in Q2. Auto sales, which took a breather last month after eight straight monthly increases, bounced back in April and were revised higher for prior months as well. Consumer spending is rising for two main reasons. First, earnings are growing due to more jobs, more wages per hour, and more hours per worker. Second, due largely to debt reductions, consumers' financial obligations (debt service plus other recurring payments like rent, car leases, homeowners' insurance, and property taxes) are now the smallest share of disposable income since 1995. All of this bodes well for spending in the months to come.
Click here to view the entire report.
|