Implications: Despite intense financial volatility, overall retail sales were essentially unchanged in August. This does not signal a recession and does not show any sign of a panic, like the one that took hold of consumers in late 2008. Sales are still up 7.2% versus a year ago and up 7.3% excluding autos, well higher than what we would expect if entering another recession. "Core" sales, which exclude autos, building materials, and gas, were up (+0.05%) in August – the eighth straight monthly increase – and are up 5.2% versus a year ago. Again, no sign of recession. Remember, even in years of solid economic growth, like 2003-04, on a monthly basis retail sales fall about one out of every four months. In other words, one month of flat or declining sales is not worrisome, as some would have you believe. As a confirmation of our view, we have been closely following high-frequency economic data. The newest data are yesterday's reports on chain-store sales, which show no sign of any major slowdown. Redbook Research says same-store sales are up 4.5% versus a year ago while the International Council of Shopping Centers says sales are up 3.3%. (These are same-store sales and cannot be directly compared to overall retail sales.) Meanwhile, given recent reports on construction, inventories, and trade, it looks like real GDP growth in Q2 will be revised up from a prior report of 1% to about 1.3%.
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Posted on Wednesday, September 14, 2011 @ 11:03 AM
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