Consumers remain willing to spend, according to a new report from the U.S. Census Bureau. Specifically, advance estimates of retail and food services sales in October totaled $526.5 billion, a welcome 0.3 percent rebound after falling in the previous month for the first time since February. “Core” retail sales, which exclude the volatile automobiles and energy components, also rose in October (0.1 percent), as did “control group” retail sales (0.3 percent), which better track consumer demand trends. Under the hood spending appeared a bit more mixed in October, with roughly half of the major categories declining.
Weakness was pronounced at home furnishing, appliance, and building materials stores, which could foreshadow a slowdown in new home sales last month, while spending at merchandise stores and non-store retailers (Amazon) remained solid. Some of the cooling recently could simply be Americans cutting back ahead of the holiday shopping season, which is likely to display a very strong year-ago comparison considering how abysmal sales were in December 2018. Consumer spending also appears linked to economic and policy narratives lately, with sales dipping when the trade war is escalating and stocks are falling, and quickly reversing as tensions abate and markets rally. If this pattern holds then the November retail sales print should be even better since softer areas of the economy have shown signs of stabilizing, equities have risen to fresh all-time highs, and confidence gauges have firmed.
Sources: Econoday, U.S. DoC, Twitter, FRBSL