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Thread: Consumer spending sank in September amid recession fears

  1. #1

    Consumer spending sank in September amid recession fears

    https://thehill.com/policy/finance/4...ecession-fears

    U.S. consumer spending sunk in September by the lowest rate in seven months, according to data released Wednesday by the Commerce Department.

    Sales of retail goods and food services dropped 0.3 percent last month as consumers tightened their belts during a stretch of intense anxiety about a potential recession.

    While the U.S. economy has held steady amid global turmoil, it has grown and added jobs at a slower rate throughout 2019. Rising trade tensions and fading foreign demand for American goods have also stunted U.S. business investment, manufacturing activity and exports.
    The state of the economy is crucial to President Trump’s reelection bid as he seeks to woo swing voters with a solid job market and steady growth. An economic slowdown could be politically devastating to Trump, particularly in areas of the country yet to recover from the 2008 recession.

    Despite the looming threat of a deeper slowdown, the U.S. boasts the lowest unemployment rate in 50 years. The jobless rate sank to 3.5 percent in September as the economy added 136,000 workers, though wage growth slumped to an annualized gain of 2.9 percent.

    Economists closely watch movements in consumer spending, which makes up 70 percent of U.S. gross domestic product, as a tool to forecast economic growth. Despite September’s decline, consumer spending in August was revised up to a gain of 0.6 percent, and an annualized gain of 4 percent.

    U.S. economic optimism also rose 3 percent in early October, according to the University of Michigan consumer sentiment survey, showing a return to a sunny outlook after recession fears peaked in August.

    While the U.S economy tends to perform best in the fourth quarter, looming tariffs on Chinese imports could pose a serious blow to consumers spending early next year.

    Trump is set to impose tariffs on $160 billion in Chinese-made consumer goods by Dec. 15, raising costs on articles of clothing, shoes, toys, electronics and other crucial imports. The tariffs pose the most direct economic threat to consumers from Trump's trade war with China.
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  3. #2
    The Commerce Department released its “Advance Estimates of U.S. Retail and Food Services” this morning. This is the first estimate for the month that will get revised – often substantially – in following months as more data become available. And the report said that in September compared to September last year:


    • Total retail & food services (restaurants, cafes, etc.) rose 4.1%.
    • Retail sales without food services rose 4.0%.
    • Food services sales rose 4.9%.
    • Retail sales without gasoline sales rose 4.7%.
    • Retail sales without gasoline, motor vehicles & parts sales rose 4.5%.
    • Sales at non-store retailers (ecommerce, vending machines, door-to-door, telemarketing, home parties such as Tupperware, etc.) rose 12.9%.


    So, a 4.0% year-over-year increase in retail sales is pretty strong – and about in line what you’d expect from the mythic figure, the indomitable American consumer. It’s the second highest percentage increase (behind August’s 4.6%) since October last year:

    But retail sales are very seasonal. And September sales, which always follow the back-to-school burst in August, always drop sharply from August, every year. So, here are the not-seasonally adjusted retail sales in billions of dollars. I marked the last six Septembers with red dots:

    Not seasonally adjusted, retail sales in September fell 8.9% from August. Last year at this time, they fell 8.3%. In 2017, they fell 4.5%, in 2016, 5.4%. But in 2013, they fell 9.2%.
    Labor Day weekend is big for retail, but it was pulled into August.

    This year, Labor Day fell on September 2, and August 31 was a Saturday, which for accounting purposes in many industries pulled Labor Day sales into August. This includes auto dealers which closed their books on the first working day after the weekend, which was Tuesday, September 3.
    Those sales showed up in August and not in September. This is not unusual. It happened in 2013, as well, when Labor Day Monday fell on September 2, and August books were closed on September 3, pulling all those sales into August. Hence the 9.2% drop from August to September 2013. In quarterly reporting, this noise disappears.
    These effects of seasonality and calendar are well known (except among reporters).

    To tone down the noise of these seasonal and calendar effects, the Commerce Department comes up with large “seasonal adjustments.” For example, the seasonal adjustments reduced the 8.9% drop in September from August to a 0.3% drop “seasonally adjusted.” This 0.3% drop is what the media got hung up about.
    Not seasonally adjusted, retail sales in September were $436.7 billion, down 8.9% from August’s $479.6 billion. That’s a seasonal drop from month to month of $43 billion.
    After seasonal adjustments, sales in September were suddenly $460.4 billion, down 0.3% from August’s seasonally adjusted $461.9 billion.
    How huge are the seasonal adjustments? In September: $23.7 billion. This is the difference between the estimate of actual sales in September ($436.7 billion) and seasonally adjusted sales ($460.4 billion).
    If these seasonal adjustments are off just a little bit, if for example, the seasonal adjustment should have been $2 billion more, a tiny amount compared to the magnitude of retail sales, retail sales would have risen +0.2%, instead of falling -0.3%.
    In other words, seasonally adjusted month-to-month retail sales growth is only as good as the seasonal adjustments. It should either be ignored or be looked at after studying the other data first, as we have done a little bit of here.
    Retail sales don’t turn around on a dime — unless there is a huge national crisis. And to claim, based on seasonally adjusted month-to-month data, that retail sales turned around from strong growth in August to sudden decline in September because the consumer suddenly got “shaky” is nonsense.
    And if the financial media – which should know better – base headlines on this seasonally adjusted month-to-month retail sales growth figure, and if they extrapolate grander themes for the overall economy and even monetary policy – such as rate cuts – from that singular seasonally adjusted month-to-month retails sales growth figure, it’s either braindead reporting or willfully manipulative reporting with an agenda behind it (such as clamoring for a rate cut).


    More at: https://wolfstreet.com/2019/10/16/br...-retail-sales/
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  4. #3
    Quote Originally Posted by Swordsmyth View Post
    The Commerce Department released its “Advance Estimates of U.S. Retail and Food Services” this morning. This is the first estimate for the month that will get revised – often substantially – in following months as more data become available. And the report said that in September compared to September last year:


    • Total retail & food services (restaurants, cafes, etc.) rose 4.1%.
    • Retail sales without food services rose 4.0%.
    • Food services sales rose 4.9%.
    • Retail sales without gasoline sales rose 4.7%.
    • Retail sales without gasoline, motor vehicles & parts sales rose 4.5%.
    • Sales at non-store retailers (ecommerce, vending machines, door-to-door, telemarketing, home parties such as Tupperware, etc.) rose 12.9%.
    And we only had to borrow a trillion to achieve it.

  5. #4
    I always cut spending in Sept . Beginning of Nov property tax , end of Nov Thanksgiving , end of Dec Christmas , New Years , then Mrs O's birthday, property tax again in May about spring planting time . Spending for me is mostly an Agrarian June through beginning of Sept thing .
    Do something Danke

  6. #5
    Now the end of Nov should start to show a spike in spending .
    Do something Danke



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