Neither US Retail Nor Industry Ended 2019 In A Good Place

US retail sales were disappointing in December 2019, though it depends upon your perspective for what that means. Unadjusted, total retail sales were 6.01% more last month than the same month of the prior year. It was the highest year-over-year growth rate since October 2018.

The reason was entirely due to base effects. You might remember Christmas 2018 for its disastrous sales. Unless the economy struck another landmine, while still struggling in the aftermath of that previous one, the annual comparison was going to look good.

It might be another lesson in why central bankers pay so much attention to the stock market. The big difference between last year and the year before, particularly between each December, was the direction of the S&P 500.

But even with stocks at record highs to end 2019 unlike 2018, the results aren’t good. Compared with December 2017, total retail sales are up just 6.5% despite two years in between. That’s barely 3% per year growth, which fits the recession-like conditions of the current “strong” economy.

Looking at retail sales instead in smaller segments using the seasonally-adjusted data, that much becomes clear(er). Remarkably, even though estimates have been up the last few months the trend still fits (so far) with the Euro$ template.

Like 2014-16, there had been an initial stumble early on in the eurodollar episode that seemingly went away in the middle (of 2015), only for a second one to show up later that year.

In 2018-19, so far same thing. Christmas 2018 was the first sign that Euro$ #4 had actually hit the US economy, too, no decoupling thanks in part to nervous consumers taking their economic cues from Wall Street (there aren’t enough actual investors for share prices to have first-order effects).

Also, like 2015, there had been a rebound in retail sales through the middle of last year. In September, the second part seems to have arrived and right on schedule. If it isn’t evident graphically, it sure is in the numbers.

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Disclosure: This material has been distributed for informational purposes only. It is the opinion of the author and should not be considered as investment advice or a recommendation of any ...

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