Consumers are the economy. When people spend lots of money buying things and paying for services, the economy does well. Retail sales are one of the best ways to measure that consumption and they are running stronger than ever since April:
While the level clearly shows a new all-time high for sales, the monthly change highlights the great September we had with 1.9% growth that, fortunately, bucks the growth downtrend we’ve seen since May:
Looking at this same series on a year-over-year basis also confirms the strength of the last few months relative to history:
While the winter remains uncertain for the virus and consumer behavior, it’s hard to see a scenario where we see anything as bad as 2008. In fact, while the drop in sales was unprecedented in severity, it was also quite short, needing only a few months to recover. This is in sharp contrast to 2008 which didn’t recover for years! So, while there are lots of challenges ahead, I’d say this is one metric that should give us some optimism on the economy.
Initial claims for unemployment ticked up this week but it will be a few weeks before we can say if this is an anomaly (like in July and August) or the start of another uptrend
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