Implications: A lackluster headline on retail sales today, but the underlying details of the report were quite positive. Retail sales declined 0.1% in September but the drop was all due to auto sales, which are volatile from month to month and which appear set for a rebound in October despite the partial government shutdown. Ex-autos, retail sales were up 0.4% in September, led by groceries and restaurants & bars. "Core" sales, which exclude autos, building materials, and gas, rose 0.5% in September, are up fifteen straight months, and 3.6% above sales a year ago...which probably explains why we don't hear any more about the federal spending sequester or fiscal cliff deal killing the consumer. Overall retail sales are up 3.2% in the past year. Assuming consumer prices rose 0.2% in September, "real" (inflation-adjusted) sales are up about 2%. Including an estimate of services, it appears real consumer spending grew at a 1.3% annual rate in Q3. Factoring in today's reports on inventories and yesterday's on the production of high-tech equipment, it appears that real GDP grew at a modest 1.8% annual rate in Q3. For the time being, the economy continues to be a Plow Horse, with growth hovering around 2%, sometimes higher, sometimes lower. Expect more of the same in Q4 before the economy accelerates in 2014.
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Posted on Tuesday, October 29, 2013 @ 10:47 AM
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