blog

Latest from the Quantamize Blog

US Retail Sales Slump Most Since 2008, Beginning of Trend or Anomaly?

Feb 14, 2019

Better Data for Better Investment DecisionsBetter Data for Better Investment Decisions
Better Data for Better Investment DecisionsBetter Data for Better Investment Decisions

 

  • An unexpected drop in December US retail sales sent shockwaves throughout US markets. While some analysts are interpreting the December US retail sales slowdown as a warning sign that proceeds slowed US economic growth, some are calling the data an anomaly with others completely writing the data off, calling it inaccurate.  
     
  • As can be seen in the chart below, overall US retail sales fell 1.2% in December from the prior month following a downwardly revised 0.1% increase in November. Analysts expected US retail sales to advance 0.1% in December.
     
  • US retail sales excluding automobiles and gasoline fell 1.4% in December from the prior month, the largest drop for the metric since March 2009. In November, US retail sales excluding automobiles and gasoline advanced 0.5%.  
     
  • US Retail sales in the “control group”, a metric some analysts use to gauge underlying consumer demand, slumped 1.7% in December from the prior month, the largest drop for the measure since September 2001 following terror attacks in the US. This metric excludes food services, car dealers, building materials stores, and gas stations.
     
  • US non-store retailers, a measure that includes online stores, fell 3.9% in December, the largest drop for the metric since November 2008. 
     
  • US Auto dealers and US building materials stores were the only two retail sales metrics to advance in December.

 

Source: Bloomberg
 

  • Analysts who are taking the US retail sales measures at face value are interpreting the metric as a sign of slower US economic momentum and a repercussion of turmoil in financial markets at the end of 2018. Analysts are also citing the US government shutdown as reasoning for the slowdown in US retail sales.  
     
  • Other analysts are speculating that US retail sales data in December is an anomaly that contradicts other data and will ultimately be revised upward in the near future.
     
  • According to Jim O’Sullivan, the Chief Economist at High Frequency Economics Ltd., December retail sales numbers were, “much weaker than expected, but so much so that the data loses credibility; the trend may be slowing, but a sudden collapse is at odds with other evidence.” 
     
  • Ian Shepherdson, the Chief Economist at Pantheon Macroeconomics, shared the view of O’Sullivan, who said that the data is, “so wild that we have to expect hefty upward revisions, but if they stand, they are unlikely to be representative of the trend over the next few months.” Shepherdson added that, “The consumer is no longer enjoying tax cuts or falling gas prices, but that’s no reason to expect a rollover.”

 

 

 

Global Top Stock IdeasTOP LONG & TOP SHORT STOCK IDEAS FOR GLOBAL MARKETSMONTHLY TOP IDEAS FROM OUR MULTI-FACTOR QUANTITATIVE MODELS
Global Top Stock IdeasTOP LONG & TOP SHORT STOCK IDEAS FOR GLOBAL MARKETSMONTHLY TOP IDEAS FROM OUR MULTI-FACTOR QUANTITATIVE MODELS