Do Stocks Always Win In The Long-Term?

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Retail sales in December were weak, as headline growth was -0.7% and core growth was -1.9% (both monthly). Headline yearly growth, excluding food services, fell from 6.5% to 6.3%, which isn’t too bad. However, sales growth, including food services, fell from 3.7% to 2.9%, which is weak.

That’s to be expected because COVID-19 shutdown restaurants. Many places expanded their ‘outdoor in name only’ seating, but it’s not as comfortable as eating outside in the summer. We say in name only because there isn’t much of a difference between outdoors and indoors with the way many places have it set up.

The chart above breaks down monthly growth in the major categories. Online sales growth was very poor, probably because it’s being compared to November, which was great for online retailers (Cyber Monday). This data is seasonally-adjusted, but November was better than normal for online stores because of the virus.

Non-store yearly sales growth fell from 26.3% to 19.2%. Food services and drinking sales growth fell from -16.6% to -21.6%. It will be even worse in January.

However, all the comps will turn on their head in March, which is also when the economy might start opening up. Finally, motor vehicle and parts sales growth rose from 5.9% to 10.1%. Remember, in January card data shows apparel doing well and electronics doing poorly. Logitech (LOGI) just reported 85% sales growth in its Q3.

We might be near a cyclical peak in spending on work-from-home products. January retail sales will be helped by the $600 checks. We don’t think the $300 weekly unemployment checks will have a large impact on January retail sales because most haven’t gone out yet. It could be a boon for February’s data.

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