November 2014 Retail Sales

Retail sales accelerated to November according to the Census Bureau.  After increasing 0.5 percent in October, the indicator grew 0.7 percent last month.  Retail sales have improved 3.8 percent on a year-to-date basis, and sales in November 2014 were 5.1 percent higher than in the same month last year.

Sales were strong despite falling gas prices.  This indicator does not adjust for price changes so the lower pump costs negatively impact the tally.  Increased retail sales while fuel prices fall mean Americans are spending money elsewhere within the economy at growing rate.  One area of strength in the period was autos-sales.  After climbing 0.8 percent a month earlier, vehicle purchases jumped 1.7 percent in November.  However, auto sales tend to be lumpy, so it is useful to look at retail sales after excluding cars and trucks; this measure still improved 0.5 percent after increasing 0.4 percent in October.  One of Atlas’ favorite components within the report is eating and drinking away from home; this is an extremely discretionary way in which consumers can spend money, and it has an intuitive substitute if Americans’ moods change, eating at home.  Restaurant and bar receipts grew 0.7 percent in November, very encouraging.

Retail sales are benefiting from an improving economy and simultaneously contributing to the growing strength of our nation’s output.  Continued labor market gains push more dollars into retail purchases as more Americans receive paychecks, and an uptick in store traffic will further justify additional hiring.  This pro-cyclicality should be bolstered by even lower gasoline prices in December, allowing 2014 to end economically strong.        (by C. Cox)