Mr. Gardner addresses consumer spending trends and consumer sentiment this report. This week the NAHB Housing Market Index for October will be released – will the results be as high as September?
What I Saw Last Week
U.S. Retail Sales rose by 0.1% in September after a downward revision resulted in no growth (from +0.2%) in August. I had forecast an increase of 0.2%. Core sales, which exclude auto purchases, dropped by 0.3% – slightly below my forecast for a contraction of 0.1%.
The story out of the retail sector remains the same. This was another month where falling energy prices should have helped drive up sales of more discretionary and luxury goods. Instead, lackluster income growth has failed to foster an acceleration in consumer demand, and consumers are clearly more willing to pocket their gasoline price savings than spend them.
Until wage growth picks up, retail demand will continue to look sluggish.
Inflation, as measured by the Consumer Price Index, met my forecast for a drop of 0.2% in September. The core rate, which excludes food and energy costs, rose…
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