At 21:30 on Wednesday, the monthly U.S. retail sales rate, known as the “terror data,” fell short of expectations of -0.3 percent after being revised down to -0.1 percent from 0.3 percent. Spot gold and silver rose short – term.
Is weak consumption an illusion?
Retail sales in November were disappointing, falling into negative territory for the first time since April.
In concrete terms, electronics, apparel and gasoline consumption fell, with even online retailers such as Amazon Posting a slight 0.2 percent increase.
The Agency’s comment:
Us retail sales fell for a second month in A row in November, likely weighed down by the ravage of COVID-19 and falling household incomes, as signs mounted that the economy’s recovery from the massive recession was slowing.
But in an upbeat sign, the New York Fed said it expected us households, particularly those earning less than $50,000 a year, to continue their spending spree over the next 12 months in spite of stagnant income conditions and expectations.
Bank of America, one of the largest credit card issuers in the COUNTRY, echoed those expectations in its latest data on credit and debit cards. Total credit card spending rose 5.4 per cent year on year in the week to December 5 as consumer demand normalised, the bank found. Importantly, bank of America’s holiday sales metric — retail sales excluding groceries — has returned to year-over-year levels, up 19 per cent, reflecting strong demand for goods during the holiday season.
So is America’s weak consumer a mirage? Consider another set of credit card data: The chart below shows that retail sales excluding autos slowed in November from the prior month, seasonally adjusted, as Amazon’s annual membership day and other competitive promotions boosted spending in October, leaving November with less online retail than in October.
Bank of America’s Michelle Meyer notes that while retail sales may indeed be on the verge of a contraction, November’s robust 9.8 percent annualized pace makes a recession hard to predict.
Overall, while typical social activities such as transportation, restaurants, travel, accommodation and entertainment remain sluggish, most other categories, especially electronics, home improvement, furniture and online sales, are surging in general.
High-frequency consumer indicators: December was even bleaker
But while November’s overall performance was good, December spending could end up taking a big hit, with other indicators pointing to more weakness, particularly in consumer activity and small business employment. In fact, the following high frequency of indicators of consumer activity suggest that a double dip may be on the way:
First, the Dallas Fed’s index of population mobility participation dropped sharply to -50.6 in the week ending November 28, the week of Thanksgiving, from -39.6 the previous week. The index measures how often, how far and how long people travel. That was the lowest level since the week ended May 30, possibly because people spent more time at home during the Thanksgiving holiday. In addition, mobility declined in all four census districts across the country during the week.
Second, For the week ended Dec. 6, OpenTable’s attendance fell 6.9 percentage points from a year earlier, to 62.6%. Colder weather and tighter restrictions on indoor eating have led to a decline in eating out, and declines have been widespread in the four main census areas.
Third, with the exception of the Thanksgiving week, consumers continued to spend less time outdoors, with fewer visitors to retail and entertainment venues, workplaces and transit stations in the seven days to December 4 than two weeks ago, according to the Google liquidity indicator.
Demand for auto gasoline during the Thanksgiving week was little changed from the previous week, while jet fuel demand was still down sharply from a year earlier.
Meanwhile, similar to a dynamic indicator of consumer activity, labor market indicators point to a slowing employment recovery that could soon contract: Initial jobless claims for the week ended Dec. 5 reached 853,000, the highest since the week ended Sept. 19. Small business employment continues to show signs of shrinking.
The “terror numbers” came shortly after market news that U.S. lawmakers were close to agreeing on a bailout of less than $900 billion, but on a smaller scale than expected, following a bipartisan bill of $980 billion and a Trump administration bill of $916 billion. An agreement could be reached as early as early this morning, but it is expected to include checks for less than $1,200 and no local aid, according to Politico, a news website.
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