Retail spending declined by 0.1 percent in February for the third straight month, starting the new year off with disappointing consumer data. Motor vehicle and parts sales were down 0.9 percent in February, decreasing for the fourth consecutive month, and one of the larger drags in the latest report. Along those lines, retail spending excluding automobiles was up 0.2 percent in February, extending the 0.1 percent gain seen in January. Despite the softer figures, the larger narrative remains an encouraging one, with consumers being a bright spot over the past year. Indeed, retail sales have risen 4.0 percent year-over-year in February, suggesting a decent pace overall even if it represented a deceleration from the more-robust rate of 5.9 percent in November. Excluding motor vehicles and parts, the pace was somewhat stronger, with retail sales up 4.4 percent over the past 12 months. Read More
Retail spending declined by 0.3 percent in January, which was a disappointing, especially given the consensus expectation for a 0.2 percent increase. Moreover, retail sales were unchanged in December, a notable revision from the prior estimate of a 0.4 percent gain. As a result of these latest figures, it is clear that consumer spending has been softer in the past two months than we would prefer. Yet, the larger narrative remains an encouraging one, with consumers being a bright spot over the past year. Indeed, retail sales have risen 3.7 percent year-over-year in January, suggesting a decent pace overall even if it represented a deceleration from the more-robust rate of 5.2 percent in December. Excluding automobiles, the pace was even stronger, with retail sales up 4.2 percent over the past 12 months. Read More
The Bureau of Economic Analysis said that the U.S. economy grew by an annualized 2.6 percent in the fourth quarter, according to preliminary data. This was somewhat lower than the consensus estimate of around 3 percent, and it represented an easing from the 3.1 percent and 3.2 percent gains seen in the second and third quarters, respectively. Overall, the latest report found solid growth in consumer, business and government spending, but headline growth was pulled lower by both net exports and inventory spending. To illustrate the impact of those various components, real GDP growth would have been 4.35 percent absent the drag from net exports and inventories, which subtracted 1.8 percentage points from the top-line growth figure. Personally, I would not be surprised to see the growth rate revised up in the coming weeks.
In 2017, real GDP increased by 2.3 percent, up from 1.5 percent in 2016. Since the end of the Great Recession, the U.S. economy has expanded by 2.2 percent on average. Moving forward, we anticipate 3.0 percent growth in 2018—or something close to that, the consensus right now is around 2.7 percent. I continue to believe that there is upward potential in that outlook for next year, especially as firms increase their investments. Passage of comprehensive tax reform and other pro-growth measures should help to stimulate economic activity, hopefully allowing us to reach 3.0 percent annual growth for the first time since 2005. Read More
The Federal Reserve Board reported that U.S. consumer credit outstanding rose 8.8 percent at the annual rate in November, up from a 6.5 percent gain in October. Total consumer credit was $3.827 trillion in November, with $1.023 trillion in revolving credit and $2.805 trillion in nonrevolving credit. The monthly increase in November was the largest in 16 years, which no-doubt helped to boost consumer spending for the month. Across the past 12 months, consumer credit has increased 5.3 percent. Read More
The Bureau of Economic Analysis reported that the U.S. economy grew by an annualized 3.0 percent in the third quarter, extending the 3.1 percent gain in the second quarter. This was slightly better than the predicted growth rate of 2.6 percent—a sign that even with the recent hurricanes, the U.S. economy continues to expand at a decent clip. Strength in consumer and business spending, including inventories, and net exports boosted the third-quarter data. For 2017 as a whole, I am predicting real GDP growth of 2.3 percent, with 3.0 percent growth for the current fourth quarter. This is a slight improvement from the 2.1 percent average growth rate since the Great Recession, but I am also estimating 2.6 percent growth for 2018. In addition, I continue to believe there is upward potential in the forecast, especially for next year and beyond, if pro-growth policies are enacted. Read More
Retail spending rebounded strongly, up 1.6 percent in September after edging down by 0.1 percent in August. The decline in August and the corresponding uptick in September were both influenced by recent hurricanes, and in the latest figures, this can be seen in robust spending growth at motor vehicle and parts dealers (up 3.6 percent) and building material and garden supply (up 2.1 percent) stores as Americans in the affected areas replaced and repaired their damaged homes and automobiles in mass. In addition, gasoline prices have moved higher, pushing retail sales at gasoline stations up 5.8 percent in September. Illustrating this point, the Energy Information Administration reports that the average price of regular gasoline rose from $2.399 per gallon on the week of August 28 to $2.583 on September 25.
In general, consumer spending remains a bright spot in the economy, with Americans more willing to open their pocketbooks this year than last, especially than in the beginning months of 2016. Over the past 12 months, spending has risen by 4.4 percent, up from 3.5 percent in the prior release. This has drifted higher over the past three months, up from 3.0 percent in June. Excluding motor vehicles, retail sales increased 4.6 percent year-over-year in September, up from 2.4 percent in June and 4.1 percent in August. Read More