Reclaiming Common Sense

Expect Good News from November Retail Sales.

There are a number of reports that give us an insight, or more, into the health of the economy. The monthly Employment Situation report, or jobs report, tells us which sectors are adding workers, what the average weekly wages are by sector, and how we are doing with regard to full-time jobs and part-time jobs. The more full-time workers we have the better the economy. The higher the weekly wage the stronger the economy. Some commentators are looking for Goldilocks numbers, not too hot, not too cold. The problem is that we have had such anemic growth during the past decade that any growth that is faster than what we have experienced seems like we are "overheating." We are emerging from an economic Winter. Anything feels warmer during the Spring and the Summer. There are a number of ways to examine the data. We can look at month to month changes, same month changes, rolling year growth and current year growth. What should we expect from Friday's November MARTS (Monthly and Annual Retail Trade Survey) data? What are the differences between the seasonally adjusted data and the non-seasonally adjusted data?

Month to month growth should surge, unadjusted, in at least five sectors. The largest gains should be in Furniture and Home Furnishings, Electronics and Appliance, Clothing, Sporting Goods and Hobbies, and non-store retail. There is the potential that Building Material and Garden, Health and Personal Care, and Gasoline sales could fall month to month. The interesting thing is that the seasonally adjusted data points to declines in Health and Personal Care, Sporting Goods and Hobbies, and even Furniture and Furnishings. Up could be down due to seasonal factors.


We should see same month growth reported in all sectors. The largest growth should be seen in Non-Store Retail, Building Material and Garden Equipment, Furniture and Furnishings, and Motor Vehicles. The seasonally adjusted data indicates that Sporting goods and hobbies could be the only sector to report a drop this November from last November's level.

The rolling year, or trailing year, sales during the past twelve months exceeded 6.0 trillion dollars for the first time last month. The rolling year growth rate last month was 5.44%. Last year the November RY value was 5.73 trillion dollars. If we grow at 5.4% then we should hit 6.039 trillion or a gain of 30 billion dollars. Last November we had $499 billion in total sales meaning that we could see $529 billion in sales this month, based on the rolling year data. We have had five periods of history where rolling year sales exceeded five percent for an extended period of time:

  • February 1996-September 1997
  • February 1999-February 2001
  • March 2004-December 2006
  • November 2010-December 2012
  • July 2018 to date (June we had 4.99%)

The current year data is trending toward 6.07 trillion. Last month we were at 4.946 trillion in sales for the year. This means that over these two  remaining months that we could expect an average of 562 billion in sales each of these months. There is normally a much larger December than November. Will we see $530 billion during November and  $590 billion during December? Could we see $499 billion and over $600 billion during December? The preliminary data is that non-store retail (NSR) was up 9% compared to last year's Black Friday, with credit card purchase up 5%. If on-line sales are up 9% then we will have an additional 5.5 billion in sales. If the rest of the market is up 5% (from 437 billion) then we should see 459 billion in sales plus 67 billion or $525,000,000,000.

The new home sales have been ahead of 2008 through 2017 levels all year. The new home sales got off to a fast start this year. The past two months have been a little slower than September and October of last year.Even so, we are still ahead of the 2016 and 2017 levels. New home sales generate retail sales. Existing home sales are a little slower than 2017, comparable to 2016, and better than 2008-2015.  Existing home sales spur retail sales. Expect a strong retail sales report this Friday. Expect $520 billion to $530 billion in total retail sales, non-seasonally adjusted. Expect all sectors to have improved sales over their November 2017 levels, with the possible exception of Sporting Goods and Hobbies.

It's the economy.