In each Economic Update, the Research staff analyzes recently released economic indicators and addresses what these indicators mean for REALTORS® and their clients. Today’s update discusses retail sales.
- The economy has been simply plodding along like a race horse on a muddy track: slow advances with no spectacular feats. Today’s data on retail sales further confirms this trend.
- Retail sales modestly fell in September and were up by only 3.2 percent from one year ago, not close to the more normal expansion gains of 5 to 8 percent.
- Vehicle sales declined a bit. But this sector had been going strong and is still up by 6 percent from one year ago. Since the autos and trucks are typically the second most expensive purchase after a house, it is worth noting how this sector is faring to help gauge consumers’ attitude towards major expenditures.
- Spending on furniture and gardening remained comfortably positive. However if home sales continue to weaken further then spending in these sectors will be at risk.
- Today’s data on weakening retail sales, combined with another of today’s data on virtually non-existent producer price inflation and yesterday’s softening pending home sales, provide assurance that the Federal Reserve will continue its active Quantitative Easing for a while longer. The “tapering” is likely to be postponed until next year. That means the low mortgage rates will likely stay around through the Thanksgiving holidays and possibly to Christmas.
- With Halloween just around the corner and costumes on the mind, it is worth noting that the overall sales activity at women’s clothing shops ($3.5 billion) tends to be about five times higher than at men’s clothing shops ($740 million). Spending patterns reflect differences in taste between the sexes. Throughout most of history, women’s life expectancy was notably lower compared to men’s — a complete contrast to what we observe today. One reason was accusations of witchcraft (another Halloween topic), particularly against women; a well-known example, Joan of Arc, was one such unfortunate victim. Also every child birth in the not too distant past was always a threat to the mother’s life. So when we observe women shopping for clothes, take delight in the progress of humanity (and by the way, men overspend compared to women at electronic and video game stores).