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
 
  Consumers Are Doing Fine
Posted Under: Bullish • Monday Morning Outlook • Retail Sales

It's hard to read the business pages or watch the business news without seeing a story about the death of the consumer.  In particular, the business press continues to be obsessed by relative weakness among traditional brick and mortar stores.

There's no denying that the business model for delivering goods and services to consumers is changing fast.  But that doesn't mean the consumer, or retail in particular, is dead.  Far from it.       

Yes, in June, retail sales were up a tepid 2.8% from a year ago, 2.4% excluding auto sales.  But the consensus view is that retail sales were up 0.4% in July.  If so, retail sales, both overall and excluding autos, will be up about 3.5% from a year ago.

That's right about what we'd expect given Plow Horse economic growth and an overall consumer price index that's up 1.7% in the past year.  Remember, goods prices have been rising more slowly than prices for services for the past several years in a row and retailers focus on selling goods.
 
Meanwhile, sales at non-store retailers, which include internet sales, have been growing at a 10% annual pace.  That's the key reason many brick and mortar stores have been taking it on the chin: not weak sales overall, but a shift toward those who can deliver the goods (literally) with the least fuss.  Need to finally throw out those old pairs of underwear?  Well, you can either get in a car and drive to the store to buy some new ones or take only a minute and go to a website that will deliver the same new ones to your door.

Also, many Americans are getting more value out of the items they buy.  When your child outgrows a toy, you can put it on the Web and sell it, while those who don't mind getting something used can buy it for less.   

This week, many analysts will focus on the retail sales figures that come out of the Census Bureau each month, but figures from deep in the GDP reports show the consumer is doing fine.         

For example, in the second quarter of 2017, total spending on motorcycles was up 9% from a year ago.  Spending on boats used for personal pleasure was up 22%.  Spending on pleasure aircraft was up 16%.

These are not the hallmarks of a consumer in the throes of death. 

Yes, we are well aware that airplane ownership is not widespread.  And, for most of the country, boat ownership isn't either.  So let's look at some other kinds of spending as well.  Spending on amusement parks and campgrounds was up 13% compared to a year ago.  Meanwhile, Americans spent 11% more for veterinary services than a year ago. 

Sorry, but Spot would not be getting better health care if Americans weren't feeling pretty good.

None of this is to say that things couldn't be much better.  Of course they could!  But the economy as a whole and the US consumer in particular keeps plowing forward despite tax rates, regulation, and government spending that are all too high.     

Meanwhile, beneath the top line growth we do have, there's a huge battle being fought between business models, old versus new.  That's not a sign of weakness, though.  It's a tribute to the entrepreneurial spirit that has made America great.   

Brian S. Wesbury - Chief Economist
Robert Stein, CFA – Deputy Chief Economist
  

Click here for PDF version 

Posted on Monday, August 14, 2017 @ 10:27 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.
Search Posts
 PREVIOUS POSTS
M2 and C&I Loan Growth
North Korea and Stocks
The Consumer Price Index Rose 0.1% in July
The Producer Price Index (PPI) Declined 0.1% in July
“Shiller P-E” Still Wrong Signal
M2 and C&I Loan Growth
The Trade Deficit in Goods and Services Came in at $43.6 Billion in June
Nonfarm Payrolls Increased 209,000 in July
The ISM Non-Manufacturing Index Declined to 53.9 in July
Personal Income was Unchanged in June
Archive
Skip Navigation Links.
Expand 20242024
Expand 20232023
Expand 20222022
Expand 20212021
Expand 20202020
Expand 20192019
Expand 20182018
Expand 20172017
Expand 20162016
Expand 20152015
Expand 20142014
Expand 20132013
Expand 20122012
Expand 20112011
Expand 20102010

Search by Topic
Skip Navigation Links.

 
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.