Strong Control Group Retail Sales Growth

Strong Control Group - Real Wages

The monthly decline in weekly hours worked hurt real weekly wage growth. But overall the November growth was still positive which means there was an improvement. This has been a relatively strong cycle for real wage growth. You can’t expect growth to average 1%-2%. Anything positive is good news.

Wage growth at the end of the last recession isn’t powerful because there was a high unemployment rate. It’s not ideal to have an unemployment spike and inflation crater.

In July 2009, headline CPI was -1.96% and the unemployment rate was 9.5%. The economy is currently in the ideal situation because the labor market is nearly full, and inflation is controlled.

U.S. production of oil helps this real wages because the energy industry creates jobs and lowers oil prices which have a big effect on headline inflation.

As you can see from the chart below, average weekly earnings growth fell from 0.8% to 0.5%. My prediction for strong real wage growth in Q4 was partially foiled by the decline in hours worked.

However, the numbers can be revised, and we still have December to show improvement. Headline inflation has been declining and the labor market is tightening. This is the best combination for strong real wage growth.

Average hourly wage growth improved from 0.6% to 0.8%. This is up from the 0.1% decline in July. Based on this metric, my prediction was accurate.

Production and non-supervisory employees average hourly and weekly earnings growth were both a strong 1%. They increased from 0.4% and 0.5% growth respectively.

Strong Control Group - November Retail Sales

Real wage growth gives you a great backdrop for understanding retail sales growth. November retail sales growth was solid. Month over month headline sales was up 0.2% which beat estimates for 0.1% growth.

The October report was revised to show 1.1% growth instead of 0.8% growth. Retail sales growth without autos was 0.2% which matched estimates. The October reading was revised 0.3% higher to 1%.

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