Retail Sales Data Indicates a Strengthening Consumer

Retail sales fell -1.5% in September, versus a revised +2.2% (previously +2.7) increment in August.  Excluding autos sales rose +0.5% in September, compared to a revised +1.0% (previously +1.1%) change in August .

Despite a still worsening employment situation, over the last several months retail sales (ex-autos) have demonstrated an upward trend, albeit at a slow pace.  This is somewhat surprising, but pretty good news for the overall economy.  It is widely accepted that the US will return to growth this quarter due to a turning in the inventory cycle.  But, without a return in final demand (personal consumption) these positive effects would likely only be temporary.  Therefore, continued improvements in retail sales, especially into the holiday season, could offset temporary increments in government spending, and eventually bring final demand back to levels that could sustain increases in manufacturing.