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By the Numbers

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

The economic analysis we previously featured in By the Numbers is now available on the Western Asset Blog. This page will no longer be updated.


Retail Sales Fade in December After November Gains

Retail sales fell 0.1% in December after a more respectable 0.4% gain in November, with that November gain revised up today from 0.2% originally. The control measure we track—excluding cars, gasoline and building materials but including restaurants—was also down 0.1% in December, but November sales for that aggregate were revised downward by 0.1%.

Sales generally declined in Christmas-sensitive areas such as electronics, department and apparel stores. However, the also holiday-sensitive area of restaurants showed a nice gain. Online shopping showed a hefty 1.4% gain in December but this sector is as yet too small to fully offset the softness elsewhere. Books, sporting goods, furniture and building material stores saw decent gains while motor vehicle sales essentially held flat over the last 3 months of the year, following stronger gains early in the year.

That story of soft 4Q15 sales following stronger performance earlier in the year also applies to the retail sector in general. As seen in the accompanying chart, since August control sales have moved back toward their 2012–14 trend path, after moving well above trend in the middle 4 months of the year.

Still, on net, retail sales finished 2015 with a decent performance. This is in contrast to other sectors of the economy that stumbled in 2015, such as capital spending and exports.

On net, today’s news won’t change the narrative of what is turning out to be a very soft 4Q15 performance. (Our estimate is that 4Q15 growth will be below 1%.) However, even with today’s mini-stumble, retail sales and consumer spending in general are still outperforming the rest of the economy. This, among other things, leads us to be believe that while GDP growth is likely to slow further in 2016, we do not appear to be at risk of a recession.

Retail Sales Trends
Retail Sales Trends Chart
Source: Census Bureau. As of 31 Dec 15. “Control” retail sales is total sales less vehicle dealers, service stations and building material stores.

Michael Bazdarich

Product Specialist/Economist

Mike brings more than 45 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.

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