The widespread economic reports have shown mixed signals about the recovery. Some reports indicate that the recovery remains underway, while others signal that it is petering out. A fresh look at retail sales came in much stronger than expected.
The U.S. Census Bureau has released its advance estimates of U.S. retail and food services sales for September 2020, and the seasonally adjusted report was up 1.9% at $549.3 billion. While the report is given a leeway of 0.5% on either side, the Econoday consensus was calling for only a 0.7% gain in September. August’s gain was also just 0.6%.
Excluding vehicles, retail sales were up 1.5% from August, beating the mere 0.3% that had been expected. Sales excluding vehicles and gasoline showed a 1.5% gain, versus 0.4% that was expected.
One reason for the slower gains that were expected ahead of the report was that no additional stimulus package has been passed. September marked the second month in which millions were without some enhanced benefits.
Where this number will really shine is in the annual readings with a 5.4% gain over September of 2019. Total sales for July 2020 through September 2020, used as a three-month period for a broader view, was up 3.6% from the same period a year ago.
The Census data showed that retail trade sales were up 1.9% from the prior month and up 8.2% from a year ago. The so-called nonstore retailers (e-commerce and catalogs) saw a whopping 23.8% gain from September 2019. The category for building material, garden equipment and supplies dealers was up a sharp 19.1% from a year earlier.
Sales for motor vehicle and parts dealers were $114.8 billion in September of 2020, up from the $110.8 billion in August of 2020 and from $103.5 billion in September of 2019.
The category for furniture and home furnishings stores saw sales of $10.4 billion in September of 2020, which compared to $10.35 billion in August and was up from the $9.9% billion reading in September of 2019. Clothing and accessories saw an 11% rise in September retail sales, and the category for sporting goods, music and books rose by 5.7%.
One category that posted a decline was electronics and appliances sales, down 1.6% decline from August.
Stocks were posting their first gain in four days on the heels of the stronger than expected retail sales. While the numbers may just be for one month, it is important to keep in mind that consumer spending activity historically has counted for nearly 70% of gross domestic product (GDP).
They are not yet updated, but the New York Fed’s Nowcasting Report was projecting a 14.07% gain in third-quarter GDP as of October 9 and the Federal Reserve Bank of Atlanta had a reading of 35.2% GDP as of October 9.