By the Numbers

Featuring brief segments of economic analysis from our senior economist Michael Bazdarich, PhD.

Sign up to receive an email as pertinent data are released.

August Retail Sales: Finally Some Signs of Life

Today's retail sales data for August showed some decent gains—nothing spectacular, but a noticeable improvement from the steady trends of recent years. As we have remarked in previous editions of this commentary, retail demand in the spring rebounded just enough to offset the weakness induced by the polar vortex, but not enough to indicate any acceleration. Well, with upward revisions to the July data—from 0.1% to 0.4%—and a 0.4% gain in August, "control" retail sales now show a noticeable acceleration from the 3.2% per year growth trend that had been in place since the beginning of 2012 to 5.8% per year growth over the last three months.

The chart shows this acceleration, with recent sales levels rising above the 2012-14 trend line. No, the recent acceleration has not been dramatic, but it is noticeable. And no, one month's news does not by itself dramatically alter the landscape, but it does give one something to think about.

Our forecast line has been that the US economy was not accelerating and that growth would continue to fall below the Federal Reserve's forecast. Today's news is a strike against that line—a first strike, but a strike nonetheless.

In terms of store types, the Commerce Department figures indicate that sales gains remained sluggish. Vehicle sales were steady, while building-material store sales have continued to perk up since the winter. Among nondurables retailers, sales have been steady at grocery stores, restaurants and apparel stores, while department and big box store sales have leveled off lately after a strong spring rebound. There have been noteworthy recent gains at health care stores and "miscellaneous" retailers, which include office supply stores. Service station sales were off in reflection of lower gas prices.

Retail Sales Trends
September Retail Sales Trends Chart
Source: Census Bureau. As of 31 Aug 14. Core retail sales is total sales less vehicle dealers, service stations and building material stores.

Michael Bazdarich

Product Specialist/Economist

Mike brings more than 40 years of experience to his position. "By the Numbers" will address economic data releases that are pertinent to a broad range of investors.

Prior to joining the Firm in 2005, Mike ran his own consulting firm, MB Economics. He earned his PhD in Economics at the University of Chicago.

Sign up to receive an email as pertinent data are released.

© Western Asset Management Company 2017. This publication is the property of Western Asset Management Company and is intended for the sole use of its clients, consultants, and other intended recipients. It should not be forwarded to any other person. Contents herein should be treated as confidential and proprietary information. This material may not be reproduced or used in any form or medium without express written permission.
Past results are not indicative of future investment results. Investments are not guaranteed and you may lose money. This publication is for informational purposes only and reflects the current opinions of Western Asset Management. Information contained herein is believed to be accurate, but cannot be guaranteed. Opinions represented are not intended as an offer or solicitation with respect to the purchase or sale of any security and are subject to change without notice. Statements in this material should not be considered investment advice. Employees and/or clients of Western Asset Management may have a position in the securities mentioned. This publication has been prepared without taking into account your objectives, financial situation or needs. Before acting on this information, you should consider its appropriateness having regard to your objectives, financial situation or needs. It is your responsibility to be aware of and observe the applicable laws and regulations of your country of residence. Potential investors in emerging markets should be aware that investment in these markets can involve a higher degree of risk. Any forecast, projection or target is there to provide you with an indication only and is not guaranteed in any way.
Western Asset Management Company Distribuidora de Títulos e Valores Mobiliários Limitada is authorised and regulated by Comissão de Valores Mobiliários and Banco Central do Brasil. Western Asset Management Company Pty Ltd ABN 41 117 767 923 is the holder of the Australian Financial Services Licence 303160. Western Asset Management Company Pte. Ltd. Co. Reg. No. 200007692R is a holder of a Capital Markets Services Licence for fund management and regulated by the Monetary Authority of Singapore. Western Asset Management Company Ltd is a registered financial instruments dealer whose business is investment advisory or agency business, investment management, and Type II Financial Instruments Dealing business with the registration number KLFB (FID) No. 427, and members of JIAA (membership number 011-01319) and JITA. Western Asset Management Company Limited (“WAMCL”) is authorised and regulated by the Financial Conduct Authority (“FCA”). In the UK this communication is a financial promotion solely intended for professional clients as defined in the FCA Handbook and has been approved by WAMCL.