U.S.: Consumers poised for the holidays

3 min

The latest data goes from good, to OK, to bad.  Most importantly, the consumer seems poised to give a solid boost to holiday sales and the overall economy. Retail sales gained a strong +0.8% m/m to a +4.6% y/y rate in October. However, the headline was driven by a +3.5% m/m surge in gasoline sales and a +1% m/m gain in auto sales.

After stripping out volatile components, core sales gained only +0.3% m/m but remained at a strong +4.5% y/y rate. Gains were widespread with a timely +1.3% m/m jump in department stores. Separately, industrial production was a bit more modest at +0.1% m/m, with the critical manufacturing component rising a stiffer +0.3% to +2.7% y/y. Thirteen of 19 sub-sectors are expanding, the most in over seven years.

Housing, however, may now be the weakest link in the econ­omy, buffeted by rising mortgage rates, high prices, and low supply. The housing market index fell a sharp -8 points to 60, the lowest in over two years. The future sales component fell -10 points, the most in 31 years. Housing starts and permits both fell into negative y/y rates at -2.9% and -6%, respectively.