Big Surge in Retail Sales Will Put More Fed Rate Hikes on the Table – MishTalk

Retail sales unexpectedly rose 0.7% in September vs. 0.3% expected. The Commerce Department revised August from 0.6% to 0.8%.

Retail Sales Scorcher

The Commerce Department’s Advance Retail Sales Report for September will raise some eyebrows.

• Advance estimates of U.S. retail and food services sales for September 2023, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $704.9 billion, up 0.7 percent (±0.5 percent) from the previous month.
• The July 2023 to August 2023 percent change was revised from up 0.6 percent (±0.5 percent) to up 0.8 percent (±0.1 percent).
• Retail trade sales were up 0.7 percent (±0.5 percent) from August 2023.
• Excluding motor vehicles, sales were up 0.6 percent.
• Excluding motor vehicles and gasoline, sales were up 0.6 percent.
• Motor vehicles surged 1.0 percent
• Food stored rose 0.4 percent.
• Nonstore sales (think Amazon) jumped 1.1 percent.

Real vs Nominal Retail Sales Percent Change From Month Ago

Retail sales rose 0.7 percent in nominal terms but it’s real spending that drives GDP. Real sales rose 0.3 percent after subtracting a 0.4 percent rise in the CPI.

Real vs Nominal Retail Sales Since 1992

Real vs Nominal Retail Sales Detail

Inflation adjusted retail sales peaked in April of 2022 at 234.19 billion.

Retail Sales Year-Over-Year

• Advance estimates of U.S. retail and food services sales for September 2023, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were up 3.8 percent (±0.7 percent) above September 2022.
• Total sales for the July 2023 through September 2023 period were up 3.1 percent (±0.4 percent) from the same period a year ago.
• Retail trade sales were up 3.0 percent (±0.5 percent) above last year.
• Nonstore retailers were up 8.4 percent (±1.6 percent) from last year.
• Food services and drinking places were up 9.2 percent (±2.3 percent) from September 2022.

Very Strong Report

After nine consecutive negative year-over-year numbers, the year-over-year percent change was 0.06 percent.

This was a very strong report, and it will spawn lots of talk about the need for more rate hikes.

Krugman Says “We Won the War on Inflation at Very Little Cost”

Bond yields rose on the news and mortgage rates are back near 23-year highs.

Not to worry, Paul Krugman Says “We Won the War on Inflation at Very Little Cost”

How the Fed Destroyed the Housing Market and Created Inflation in Pictures

For further rebuttal of the preposterous idea that we can claim victory over inflation, please see How the Fed Destroyed the Housing Market and Created Inflation in Pictures

I present 11 images as rebuttal to Krugman’s nonsensical Tweet.