Retail sales are still strong

Daily Data: So who's responsible for this?

In today’s dispatch:

• strong sales

• one category, in particular, stands out

• who’s doing all this spending?

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Who’s responsible for all the consumer spending?

Census says, retail sales came in stronger than expected.

Random Walk demands to know who is responsible for this.

Hotter than expected sales

Expectations were for 0.4% increase, and the results came back 0.7%.

It’s good news, but keep things in perspective.

Over a longer period of time, it looks like this (via Census):

Not much of a change, in the big scheme of things, but certainly allays any fears that the January slowdown was something other than the cold.

Anyways, as a single print, there’s no reason to read it too closely (and the miss was within scope of any revisions, so the data might change in a few months).

In terms of what it says about any larger themes, again, probably not much.

But, that wouldn’t make for a very interesting post, even if it’s closest to the right answer.

So, we’re going to squint a little bit.

And the truth is, is that if you squint closely enough, you can maybe just confirm some Random Walkian priors about where consumer strength is coming from.

Consumer strength is driven by people—RW suspects lower income people—spending their new wages by buying more stuff online. And it’s mostly stuff that they will consume right away, like food, and/or other sundries, and not, e.g. “nice to haves,” like home goods, or expensive discretionary items, like cars or TVs.

That’s not a bad or good thing. It’s another way of saying that spending growth is driven by the same forces driving the labor market, i.e. mostly lower-income service workers.¹

Why does Random Walk think that? Well, mostly because I thought that before. In terms of what flows specifically from the retail spending data that would validate my priors?

Follow me, and I will show you.