Retail Sales Signal Slowing, Not a Collapse, in Spending
Amid the ongoing trade war and worries about a potential recession, the strength of consumer spending has been a needed counterweight. Today's 0.3% decline in September retail sales is the first crack in the foundation.
Worrying Slip, Especially Amid Shaky Nerves
The first decline in seven months for retail sales follows on the heels of an upward revision to August which softens the blow somewhat. Still, with the recent deterioration in consumer confidence and broad-based declines across various types of merchants, this report is the first hard data to indicate cracks in one of the key pillars of the economy that, so far, had been holding up rather well.
Not a Collapse, Just a Slowing in Consumer Spending
Auto sales fell 0.9%; we already knew that sales to dealers rose to a 17.2 million annual pace in September. The new model year rollouts make inventory turnover tricky at this time of the year though the trend in autos remains moderately positive.
Today's report is right in line with our forecast for the annualized pace of PCE growth to slow to about 21/2% in the third quarter before settling to a 2% pace in the further out quarters.
Author
Wells Fargo Research Team
Wells Fargo
