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.
The Federal Reserve is supposed to fight inflation (changes in cost of living), not enable trillions in debt expansion year after year, decade after decade. For the last 25 years, inflation was most evident in financial assets but it was there all along. Sooner or later, the financial bubbles were always going to spread into consumer costs.
Looking at grocery costs, home heating costs, mortgage payments (including property insurance and property taxes), health care costs (the total premiums paid plus out-of-pocket)… Do the “smart guys” on Wall Street and TV actually look at their own family bills?
The supposedly “learned” economic professors at ivy league colleges go on TV to give their self proclaimed “expert” opinions about CPI/PME… just before they raise tuition costs by 3-4x as much, decade after decade. Academia’s behavior doesn’t line up with its own CPI marketing spin.
The union workers picketing UPS and GM/Ford may not be able to articulate the inflation problem using Wall Street terminology. That big-beard guy who sings “Rich men north of Richmond” might not have an economics PhD from Ivy League University, he doesn’t mention Laffer curves or recite neo-Keynesian babble-dee-goo, his CV lacks even a masters much less a PhD. But the blue collar folks have connected the dots, while the allegedly “smart guys” are arguing about CPI.
Foreign creditors have realized the US government is completely disfunctional no matter which crime family / political party is nominally “in charge”. And they figured this out from far away time zones… long before the experts on TV, long before Wall Street pundits, long before academia.
Are the TV / politicians / Wall St / academics really this stupid?
Or are they “not seeing the problem” because they are paid really well not to see it?
Whichever your answer, why are the rest of us still listening to them?
Interest rates will stay high until debt is paid down or inflated away, whichever comes first. Debt levels won’t go down if the country runs $2 trillion spending deficits year after year, or if tax increases crush the economy.
An economy that was growing 6-7% per year cannot support government spending that increases 8-10% per year. Period. Even the blue collar folk know this. The TV / Wall Street / political pundits are only fooling themselves.
The fed has basically lost control. It has no choice but to raise rates. And if you think interest rates are high now, just wait until after the election when all the pretense is gone.
Stocked up on items in 2022 before the prices doubled. Also took advantage of good sales.
We know handing out trillions $ in cash tax rebates reliably generated inflation. Wouldn’t a trillion $ of new taxes reverse the effects and help to restore the budget balance. Apparently every $ of govt spending is absolutely necessary since decades of work by congress has been unable to reduce, let alone cut spending.
Bringing back Reagan’s tax levels would be a start. They could call it the Iraq/Afganistan/Covid payback surcharge Tax.
Mathematically it should. MMT says so too. Siphon up the excess cash and inflation drops.
The problem is who to tax, as it always is. The rich believe taxation is theft and pay accountants to hide the money. The poor have no money by definition. The middle class has a little money but there aren’t enough of them left to make a difference.
Tax the Corporations? They just raise prices and make inflation worse. The workers get crushed by the new inflation, the shareholders get less, and that is the middle classes retirement accounts, then the CEOs get huge payouts for their brilliance and hire accountants to make the bonus disappear.
“retail sales NSA actually crashed 5.4% MoM in September”
Government inflation adjusted is unreal.
A $ 2 Trillion+ deficit is a hell of a drug.
Another day of selling some oil and gas stocks into the strength. Cash position rising close to 20% now, maybe heading to 25% eventually, then waiting for the next pullback.
This market has been the gift that keeps on giving for the last several years.
Year over year basis CPI is up 3.7%. Excluding shelter costs, the CPI is up only 2.0%. The Fed has arrested the inflation caused by $6 trillion of federal deficit spending in 2020 and 2021. No more rate hikes are needed.
I wonder how much of this spending is consumer debt… if a lot of it is, things will snap back hard when people hit their credit limit after the fed has raised rates to curtail spending. All their discretionary income will belong to Mastercard.
Yep, that is how dumb the Fed is.
Stagflation still nowhere in sight.
Savings rate is falling? If inflation is faster than bank interest, saving money for many people is a bad decision. Like Germany in the early 1920s, spend it before it evaporates. And I note, in the last six months, a drycleaned shirt went from $2.69 to $5, a two-liter of soda went from $1.79 to $2.59,… a gallon of milk went up $1, etc. There is a lot of inflation.
No inflation in crude oil though Was 147 in 2008 , 85 now
The $.69 per pound of onions is now $1.49, and I have not heard of any onion crop failures.
Milk I buy is down 10%. Eggs are down 75%. I just got snack nuts for the lowest price I can remember ever. There’s a lot of deflation
@ George Phillies
My thoughts exactly. I figure that people are foreseeing higher inflation in the future and will now be purchasing items that they were delaying in the hopes that prices might retreat.
So stop dry-cleaning your BVDs, lay-off the soda & the Slim Jim’s & stop glugging the cow phlegm. Vote with your dollars, you shopping-obsessed weirdos! Buyers Strike is what we need.
Maybe a public deficit induced growth?
Yep, the Biden Administration is shoveling money into the economy as the Fed is trying to take it out. Can this thing hold together till the next election? I’m doubtful. One way or the other a financial disaster is not to far off.
“Bond yields rose on the news and mortgage rates are back near 23-year highs.”
Bought back my TLT calls and sold some cash secured puts on TLT for the next dollar down and will keep doing it as it drops more and more. Bought some 5 year TIPS too. Bonds are where it’s at right now. Buy! Buy! Buy!
Not sure why this news is “unexpectedly” because until we have massive layoffs, people will have money to spend and as boomers continue to retire and enroll in social security, they too will have money to spend. Biden’s IRA hasn’t even kicked into full gear yet. More inflation on the way….just as I predicted. Choo! Choo!
Why would you buy bonds if more inflation is on the way? That means more rate hikes and falling bond prices.
And do you know when the exact bottom will be for bonds? If so tell me so I can buy when you do. If you don’t know then the best thing to do is to dollar cost average down. We all know the Fed will cut at some point down the line and bond prices will spike.
And if you will note, I am buying via cash secured puts which lowers my cost basis and I am selling calls on rallies which generates income/profits and also lowers my cost basis.
Yes I agree. But, “Buy! Buy! Buy!” seems a little strong. Perhaps start easing your toe in the water. Next year is an election year and every effort will be made to extend and pretend.
Well I’m buying three different types of bonds, hence the three buys.
1. TLT
2. 5 Year TIPS
3. 20 Year Treasuries
And I’m buying small amounts now and will ratchet up and the next plunge.
I also bought GSE bonds paying 6.83% over 20 years recently but it is callable.
So all the illegals buying crap with free $ is screwing the actual citizens.
I’ve been waiting to pull the trigger on long term treasuries, think I’ll wait some more.
Sounds about right…
MND shows 30YFRM up to 7.80% today. Bring on 8% mortgages baby! Woohoo!
GDP Now tracker shows the 1st 5 readings for October have pushed the 3 Qtr GDP estimate up to 5.1%.
That’s pretty dang big GDP and will keep inflation higher for longer.
Krugman is a liberal imbecile. No one should believe a word that comes out of his mouth.
By the December rate hike, we’ll all come to grips with how wrong JPowell was for letting off the gas just like the how “transitory” fiasco.
Open borders mean higher for longer rent inflation, gas prices, food prices, insurance costs which means higher for longer CPI. Duh!
Hey Ben, we finally agree: Krugman is a moron. Too bad you aren’t in the paleo conservative camp, instead of the war mongering neocon camp. You know the neocons originally were Democrats which is why Bill Kristol supported Hillary and wants mass immigration. Stop listening to low brow Sean Hannity and pay more attention to Tucker.
Yeah Alex I was shocked to actually agree with Benny on something
Um, Alex, thanks for “acting” like you know me, but I’ll take the 1/2 agreement as a positive sign that we can build middle ground.
I’m totally against our support of Ukraine or at least acting like it’s a blank check that’s for sure. I’m with Tucker on this one for sure, but you probably don’t like him.
Be that as it may, I am in the support Israel camp 100%. Again, not with a blank check, but we should have their backs. And actually, it shouldn’t just be us. The entire EU and any modern, industrialized nation with a decent military should be extoling their solidarity with Israel.
That’s the problem with these types of quagmires. There should be at least 15 major nations today saying, “Israel, we have your back”. If Iran pulls the trigger themselves or through Hezbollah, then everyone needs to be sending their planes into Iran, missiles locked.
If that makes me a war monger, then so be it. I’ll proudly wear that hat.
MND 7.92% 30YFRM
WOOOOOOHOOOOOO!!!
GO BOND VIGILANTES!!!
“By the December rate hike, we’ll all come to grips with how wrong JPowell was for letting off the gas just like the how “transitory” fiasco.”
Agree 100%. While it might seem to some like the Fed is being aggressive, that’s only against the backdrop of artifically low interest rate policy of the last 15 years. It was indeed stupid for Powell to pause last month.
I think that people forget that Arthur Burns raised interest rates throughout the late 1970s but Volcker gets all the credit for slaying inflation because Burns was too timid and Volcker finally ripped the band aid off.
Powell is like Burns. He’s doing something, but not nearly enough.
Volker raised the FFR 900 basis points in 7 months. That guy had balls.
JPowell not so much if at all.
Yes, but, in the 1980s, the debt to GDP wasn’t 130%! They have no choice but inflation and financial repression. They pretend they’re against it, but, they are the architects. They just blame it on the greedy business men and avoid any mention of their counterfeiting. Our politicians are scoundrels, that is why they divert us with cultural disruption (wokism) and foreign wars. The real enemy of the American people is the political class and their puppet masters.
On this we agree. I don’t think we’re too far apart, honestly.
And, you now what else they didn’t have from 1973 – 1983? 10M illegals running across the border causing chaos, bringing in tons of drugs, causing the Feds to spend tons of money to support them, & MOST IMPORTANTLY driving up rent, food, & gas inflation.
The debt to GDP ratio is a big deal, of course, and we’ll see how this makes JPowell respond. I think we both agree it has a lot to do with his unwillingness to keep raising rates, causing him to SLOW DOWN.
We shall see.
Cheers!
Yup.
Simply put, the US House of Representatives spends the money, with a very slight check by the US Senate.
It’s the elected politicians that are pushing the US into insolvency.
GDPNow was 5.1% before this retail report. Today’s estimate will surely be even higher.
Oct 17 estimate is 5.4%. It’s been pretty accurate lately. Amazing. Fastest growing economy of the 21st century.
Oh, they must have updated it since I saw it this morning. The last reading I saw was the 10/13 reading under the subcomponents contributions which still had it at 5.1%. 5.4% – WOW!!! That’s huge! It’s reaccelerating up towards the 5.9% reading back on 8/24. And the CME FFR Watch is still at 88% for a Nov 1 pass. Just stunning.
I know. Granted, it’ll probably get adjust down in a couple of months, but assuming it’s reasonably accurate, then this suggests there’s tremendous energy in the economy. It’s so strong, in fact, that it’s laughable that the CME Group still is calling for a Nov 1 pass by the Fed.
IMO, the Fed seems to want the UAW strike to singlehandedly make that 5.1% move down to sub 3%, so they can justify not raising rates in two weeks. They should go up 25 on 11/1 and then be ready to pull the trigger again in Dec. Instead, they continue to take the road most traveled, the path of least resistance.
Unless the commercial real estate really starts to get hit bad by the end of the year, I think even that doesn’t do much damage. In fact, I’m not sure anything outside of a major armed conflict will do much damage, since the Fed seems ready & willing to backstop every financial problem that crops up nowadays.