Monthly retail sales report suggests faster than expected economic slowdown in the U.S

Monthly retail sales report suggests faster than expected economic slowdown in the U.S
Written by:
Michael Harris
13th December 2019
Updated: 11th March 2020
  • U.S Census Bureau reveals a slower than expected growth in retail sales in November.
  • The report hints at a faster than expected economic slowdown in the U.S economy in the Q4.
  • November's data is contradictory to what the retailers had reported after Black Friday.
  • Economists cite a late Thanksgiving in 2019 to have contributed to poor retail sales in November.
  • Consumer spending improved by 2.9% (annualized) in the third quarter.

The U.S Census Bureau announced the monthly core retail sales report on Friday. Noting worse than expected increment in retail sales, the report stirred the fears of a faster economic slowdown in Q4.

Earlier this month, the economic data including housing, labor market, manufacturing, and trade was reported optimistic that had hinted at the U.S economy’s resilience amidst the global economic slowdown and the U.S – China trade complications.

The U.S Federal Reserve Kept Rates Unchanged On Wednesday

The U.S Federal Reserve also kept rates unchanged on Wednesday as Chair Jerome Powell saw the economy in a good place and expressed confidence in its moderate growth in 2020 while expecting the unemployment rate in the U.S to remain low. The Fed also hinted at the rates to remain unchanged through fiscal 2020.  

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October’s report had highlighted the retail sales to have improved by 0.3%. The revised report had also upgraded the growth in retail sales to 0.4% in October. Staying in line with October’s growth, analysts were expecting a 0.5% growth in retail sales in November. Printing 0.2%, however, the report was in contradiction with the sales gains that were highlighted by the retailers after Black Friday.

According to the Economists, a late Thanksgiving in 2019 may have weighed on the November’s retail sales report as a chunk of it may be recorded in December’s report that is to be published in January 2020. In terms of year over year growth, however, the U.S retail sales improved by 3.3%.

The Census Bureau also announced the monthly core retail sales in the United States of America to have improved by 0.1% in November. Core retail sales saw an increase of 0.3% in October, following which, analysts had anticipated a 0.4% growth in core retail sales in November.

Consumer Spending Improved By 2.9% (Annualized) In The Third Quarter

In the third quarter, consumer spending was reported to have improved by 2.9% (annualized). Consumer spending makes up around a little under 70% of the U.S economic activity. Following the lackluster core retail sales in November, economists have curtailed their forecast for GDP growth to under 1.5% from the previously estimated 1.8% for the fourth quarter. Economic growth in the third quarter was highlighted at 2.1%.

The U.S dollar index dropped from a high of 97.48 on Friday to a daily low of 96.72. Later in the day, the index regained much of the losses and is currently trading at 97.225. EUR/USD as a response dropped from a daily high of 1.1185 to its current level of 1.1115.

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