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