{"id":1613,"date":"2019-10-16T11:46:55","date_gmt":"2019-10-16T15:46:55","guid":{"rendered":"https:\/\/naroffeconomics.com\/?p=1613"},"modified":"2019-10-16T11:46:55","modified_gmt":"2019-10-16T15:46:55","slug":"september-retail-sales-and-october-home-builders-index","status":"publish","type":"post","link":"https:\/\/naroffeconomics.com\/?p=1613","title":{"rendered":"September Retail Sales and October Home Builders Index"},"content":{"rendered":"\n

KEY DATA:<\/strong>  Sales: -0.3%; Over-Year: +4.1%; Ex-Vehicles:\n-0.1%\/ NAHB: +3 points<\/p>\n\n\n\n

IN A\nNUTSHELL:<\/strong>  \u201cThe surprisingly weak retail sales may not be\ntelling us the canary is falling over.\u201d<\/em><\/strong><\/p>\n\n\n\n

WHAT IT\nMEANS:<\/strong>  As I noted a couple of months ago, if\nconsumers are driving growth, then consumer spending has to be the canary in\nthe economy.  On the surface, today\u2019s\nunexpected September drop in retail sales might be taken as a sign that\nhousehold broad shoulders are drooping. \nBut I am not that sure. <\/em><\/strong> Yes, the details of the report were pretty\nawful.  Spending on vehicles, gasoline,\nbuilding supplies, general merchandise and even the Internet were down.  <\/em><\/strong>There was a sharp rise in purchases\nof furniture and health care products, and we ate out a little more, but that\nwas largely it.  But gasoline prices were down<\/em><\/strong>,\nso we can take that out.  Vehicle\ndemand is still reasonably good<\/em><\/strong> and indeed, the annualized pace of\nsalesin September was slightly above the August rate.  If you remove these two categories, as they\ntend to be affected by either prices (the data are not price-adjusted) or\ntemporary factors, third quarter sales grew at a robust seven percent\nannualized pace from the second quarter.<\/em><\/strong>  And that points out what I always point out:\nOne month\u2019s data don\u2019t necessarily give a good picture of the trend.<\/p>\n\n\n\n

On the housing front, the National Association of\nHome Builders\u2019 Index popped in October. \nIt hits its highest level in nearly two years. All three components,<\/em><\/strong> present conditions, future\nsales and traffic, were up solidly<\/em><\/strong>.  There\nwas one concern in the report: Not all regions are seeing an uptick in\nactivity. <\/em><\/strong> In the West,\nconditions soared, while they were better in the South.  But the Northeast and Midwest had declines in\ntheir overall indices.<\/p>\n\n\n\n

MARKETS AND\nFED POLICY IMPLICATIONS:<\/strong> While it may be clear that consumer spending\nis slowing, it is not clear the extent to which that is happening.  Just looking at September\u2019s numbers gives the\nimpression that the canary is starting to keel over.  But adjusting for volatility in the data\ndoesn\u2019t confirm that trend.<\/em><\/strong> \nConsumers are still spending fairly decently, though as is abundantly\nclear, at a somewhat slower pace than they had been.  We are looking at a moderation not a\ncollapse in demand<\/em><\/strong> and that is why third quarter growth will likely\ncome in at roughly two percent.  That\nsaid, the outlook is for further deceleration in household spending.<\/em><\/strong>  With job growth, wage gains and hours worked\neasing back, the gains in income needed sustain strong consumption are just not\nthere.  The headline should give\ninvestors pause, but they are still focused on the China trade talks.  While a deal was supposed to have been agreed\nto, it is unclear when or if a mini-agreement will be signed.  So don\u2019t unbuckle those seat belts just yet.<\/p>\n","protected":false},"excerpt":{"rendered":"

KEY DATA:  Sales: -0.3%; Over-Year: +4.1%; Ex-Vehicles: -0.1%\/ NAHB: +3 points IN A NUTSHELL:  \u201cThe surprisingly weak retail sales may not be telling us the canary is falling over.\u201d WHAT IT MEANS:  As I noted a couple of months ago, if consumers are driving growth, then consumer spending has to be the canary in the … Continue reading September Retail Sales and October Home Builders Index<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1613","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1613","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1613"}],"version-history":[{"count":1,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1613\/revisions"}],"predecessor-version":[{"id":1614,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1613\/revisions\/1614"}],"wp:attachment":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1613"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1613"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1613"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}