Some will call it inevitable.
US retail sales rose just 0.3% in October, less than expected. The market was looking for a 0.5% gain. It’s probably a bit hyperbolic to call this a coal mine canary, but there it is — I just did.
The letdown comes on the heels of a blistering September beat which looks to have been revised lower. October’s report will likely serve as fodder for those who insist the US consumer can’t continue to shoulder the burden of the recovery without additional fiscal stimulus from Congress, which is hamstrung in the lame duck session by recalcitrant Republicans who still hold the cards in the Senate.
The ex-autos print was just 0.2% for October. That’s well below the 0.6% consensus expected. The control group rose 0.1%. That looks like a grievous miss — consensus there was for a 0.5% gain.
It’s hard to see how this is anything other than a disappointment. Of all top-tier economic data points stateside, retail sales sticks out as having staged a “real” V-shaped recovery, where that means the total value of sales is above its pre-pandemic levels.
Other purported “V-shaped” charts typically show the month-on-month change in a given data series, which can be deceptive.
As such, retail sales are a “bright spot,” so any miss is especially unwelcome. And October’s data is a miss. In fact, it’s the weakest print of the recovery, and the revisions look negative too.
This is extra vexing as it means consumers kicked off the fourth quarter in less-than-robust fashion. And that was before new lockdowns.
Sure, it’s possible to put a positive spin on this by looking at YoY prints, characterizing the deceleration as modest, or simply pointing to the fact that a gain is a gain, and this makes a half-dozen sequential monthly increases in a row.
Jobless claims are loitering near pre-pandemic records and unemployment is still elevated. It’s true that both have come down dramatically, and that’s unequivocally a good thing, but… well, I’ll just give the last word to Stephanie:
Congress must act. https://t.co/5QcMVwN2Y8
— Stephanie Kelton (@StephanieKelton) November 17, 2020
Economic data is important for what reason? I thought it was all about the central bank backstop in which confidence is over the top and that is all that matters. And if data is important does it mean bad news is good news. Tell me why confidence in central bank put is likely to crumble and then I will care. Too harsh? Maybe, I am not oblivious to the human cost and the fact that this analysis is just the thing that only bolsters the 0.000000001% and is not kind the the 99.99999999%.
You are not being too harsh.
Many of us feel similarly. We don’t want to get messed over for what little savings and money we have while at the same time we recognize the plight and suffering of so many fellow citizens.
The CB put is all that matters for it is the only policy keeping this hot mess from turning into a deflationary siphon. You are not being too harsh.
Well put, Vladimir. Not only does the economy not matter, earnings and corporate debt levels can safely be ignored. Is it a big stretch to suggest that stocks are now not much different than gold or, dare I say it, Bitcoin?
For a few years all that mattered was buy-backs. This year it has been central bank largesse and what implied volatility levels will trigger system buying. These things pass, eventually … someday ….
The retrospective on this period in American history will be all to easy to research and understand.
Here we are, witnessing real-time policy blunders. And the evidence is being digitally archived for us.