Report: December Retail Sales “Unexpectedly” Fell the Most in Nine Years

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Thanks to LiliVonShtupp for the heads up here, helping us, as always, to keep abreast of the comings and goings with markets and the economy and giving us insights into what to look at and look for and expect.

“These are the only ‘polls’ that give us the full picture out there, not polls about ‘optimism’ on whether or not folks feel they’ll be doing better financially next year.”

According to a Bloomberg report, U.S. Retail Sales Unexpectedly Fall the Most in Nine Years, “U.S. retail sales unexpectedly fell in December, posting the worst drop in nine years in a sign of slower economic momentum at year-end amid financial market turmoil and the government shutdown.”

Stock futures erased gains, Treasuries rose and the dollar fell, as the broad weakness across most sectors added to signs that U.S. economic growth is cooling from prior quarters — potentially by more than projected. It may reinforce investor expectations that the Federal Reserve will hold off on raising interest rates this year amid concern about trade and global growth.

“These numbers are horrible,” said Ward McCarthy, chief financial economist at Jefferies LLC. “It appears to contrast quite sharply with reports of Christmastime sales that were generally seen as quite healthy,” and for the Fed, “rate normalization is on the back burner for a long time to come.”

Source Commerce Department

While the steep drop follows other data pointing to slower growth, it’s at odds with figures showing a healthy job market and steady wage gains. The slump also may prove temporary as stocks have regained ground following the biggest December plunge since the Great Depression, and the government shutdown ended in late January.

All but two of 13 major retail categories showed a decline, with non-store retailers — which includes online stores — falling 3.9 percent, the most since November 2008. The broad-based weakening reflected lower sales from clothing stores to and gasoline stations. Auto dealers and building materials stores were the only sectors to record increases.


Citing as a possible “sign of potential residual effects of the shutdown,” a report released Thursday from the Labor Department “showed filings for unemployment benefits unexpectedly rose last week.”

“‘We’re going to go a lot higher’ than 4.1% GDP number.” – DJT, 2018

Behold the tank.

“The growth rate of real gross domestic product (GDP) is a key indicator of economic activity, but the official estimate is released with a delay,” and because of this delay, the Federal Reserve Bank of Atlanta’s GDPNow, a forecasting model of the GDP, “provides a “nowcast” of the official estimate prior to its release by estimating GDP growth using a methodology similar to the one used by the U.S. Bureau of Economic Analysis.”

“Recent forecasts for the GDPNow model are available here. More extensive numerical details—including underlying source data, forecasts, and model parameters—are available as a separate spreadsheet. You can also view an archive of recent commentaries from GDPNow estimates.”

Latest forecast: 1.5 percent — February 14, 2019

Note: Updates of GDPNow nowcasts of GDP growth in the fourth quarter of 2018 will continue until the day before the first official estimate is released by the U.S. Bureau of Economic Analysis on February 28. The initial GDPNow nowcast of first-quarter GDP growth is now scheduled for March 1 after the personal income and outlays release by the U.S. Bureau of Economic Analysis and the Manufacturing ISM Report On Business from the Institute for Supply Management.

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2018 is 1.5 percent on February 14, down from 2.7 percent on February 6. After this morning’s retail sales and retail inventories releases from the U.S. Census Bureau, the nowcast of fourth-quarter real personal consumption expenditures growth fell from 3.7 percent to 2.6 percent, and the nowcast of the contribution of inventory investment to fourth-quarter real GDP growth fell from -0.27 percentage points to -0.55 percentage points.

Federal Reserve Bank of Atlanta

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