Positive Trends in Key Retail Categories
When excluding automobile sales, November witnessed a 0.2% rise in overall retail sales, once again surpassing the forecast of no change. Furthermore, excluding both automobiles and gas, sales experienced an impressive 0.6% increase.
This growth in retail sales reflects consumers’ ability to keep pace with rising prices, as indicated by November’s 0.1% monthly increase in the consumer price index. On an annual basis, sales have seen a notable acceleration of 4.1% compared to a headline CPI rate of 3.1%. While the inflation rate still exceeds the Federal Reserve’s 2% target, it remains significantly below the peak of over 9% observed in mid-2022.
Economic Growth Remains Strong
Andrew Hunter, the deputy chief U.S. economist at Capital Economics, emphasized that the rebound in retail sales for November demonstrates that the ongoing decline in inflation does not come at the expense of weaker economic growth. Despite a significant 2.9% decline in gas station receipts due to a slump in energy prices, other sectors compensated for the weakness.
Bars and restaurants experienced a 1.6% increase, while sporting goods, hobby, book, and music stores saw a gain of 1.3%. Online retailers also posted a notable 1% sales increase. The “control group” of sales, which excludes several categories and feeds into calculations for gross domestic product (GDP), grew by 0.4%.
In the week ending December 9th, initial claims for unemployment insurance dropped to 202,000, the lowest level since mid-October and a decrease of 19,000 from the previous week. This signifies a positive trend in labor market conditions, further supporting economic stability.
The Federal Open Market Committee projects a reduction of approximately 0.75 percentage points from short-term borrowing rates in 2024 according to their latest policy meeting. This decision reflects the Fed’s commitment to maintaining favorable monetary conditions.