Sales stay strong

Many media — even financial media — were surprised by yesterday’s November US retail sales report. The FT headlined, “US sales rise unexpectedly in November“. Bloomberg was forward leaning, “US retail sales unexpectedly rise in solid start for the holidays“. The Wall Street Journal more narrowly noted economists were surprised. Given Tuesday’s CPI and big sales reported for Black Friday (and related), I’m not sure why the rather modest retail sales growth surprised anyone (see chart below).

The Census Bureau summarized: “Retail trade sales were up 0.1 percent (±0.5 percent)* from October 2023, and up 3.1 percent (±0.5 percent) above last year. Nonstore retailers were up 10.6 percent (±1.6 percent) from last year, while food services and drinking places were up 11.3 percent (±2.3 percent) from November 2022.”

Despite progress, inflation reinforces nominal retail outcomes. Employment has recovered. Real-earnings are consistent with pre-pandemic patterns. Consumers have “plenty of dry powder“, It is the season of gift-giving. Pull remains persistent. Supply chain push continues well-aligned with current pull.