According to analysts from Wells Fargo, the 0.2% decline in retails sales in August, was influenced by hurricane Harvey. They see that the prognosis for PCE in Q3 GDP growth has certainly weakened.
Key Quotes:
“Advanced retail sales for August marked the beginning of several months in which retail sales data will show impacts from hurricane Harvey on Southeast Texas. Some early prepping by Floridians for Irma also may have been included in the surge of spending at grocery stores. Most sales showed steep declines from lost selling days at the end of the month, with auto sales showing the sharpest drop.”
“Downward revisions to the previous month added salt to the wound this morning. July’s 0.6 percent rise first reported was revised to 0.3 percent, which wipes out some of the comforting buffer that Q3 PCE had built up to lessen the blow from the two major hurricanes that will inevitably cut into personal consumption growth in the GDP calculations. Control group sales also declined by 0.2 percent in August and the 3-month annualized rate of 1.1 percent is the slowest pace so far this year.”
“August sales at building supply stores were somewhat of a wildcard, as Harvey made landfall on August 26, closing stores for the entire last week of August. While some rebuilding purchases may have been made in August, the 0.5 percent decline in building material sales on the month suggest most of that spending took place in September. Prepping for Hurricane Irma will also likely boost this category in September.”
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