With the continued delay in the official release of the more comprehensive personal income and spending report, retail sales, which is normally one of my most important indicators, assumes even more importance. Additionally, with employment growth all but dead in the water since April, consumer spending - which leads future employment - is the single most crucial of whether or not the economy has reached a turning point. Unfourtanely, of course, because this release is for September, it is somewhat sale.

In any event, in September nominally retail sales rose 0.2%. There was no revision to August. After taking into account the 0.3% increase in September consumer prices, real retail sales declined -0.1% for the month from their post-pandemic high in August. Because real pesonal spending on goods historically tracks the trend if not the amplitude of real retail sales, that is also included in the below graph (gold, right scale):

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So far there is no information as to when the latter series might be updated.

Historically, with the notable expection of 2022-23, in the past 75 years whenever real retail sales turned negative YoY, a recession was about to begin or had just begun. If it was positive and not sharply decelerating, a recession was unlikely in the immediate future. At present real retail sales are higher YoY by 1.2%, so there they are not forecasting any imminent downturn in the economy:

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Further, because consumption leads employment, here is the updated graph of real retail sales YoY, together with real personal consumption of goods compared with nonfarm payrolls (red):

(Click on image to enlarge)

The last time I reported on this over two months ago, I wrote that “Based on historical experience, after the last two good months, real retail sales now suggest that YoY jobs growth will not roll over, but remain in a similar weakly positive range for the next several months.” That has been borne out so far, and that remains my conclusion for the next several month of data when they are reported (i.e., October and this month) as well.

Finally, because of the lag in the official data due to the shutdown, I have been paying extra attention to alternate indicators, and in this case the weekly Redbook Index of consumer spending. This was up 5.9% YoY this week, and has been trending gradually higher YoY since summer:

(Click on image to enlarge)

This likely reflects the wealth effect for the most affluent households due to the AI Boom in the stock market, which at least for now is counterbalancing the constricting effect of tariffs on spending by lower income households.

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