INDICATOR: November Retail Sales and Weekly Jobless Claims
KEY DATA: Retail Sales: +0.7%; Excluding Vehicles: +0.4%; Claims: 368,000 (up 68,000)
IN A NUTSHELL: "We may have counted out the consumer too soon as households seem to be willing to spend whatever limited funds they have."
WHAT IT MEANS: Retailers have been singing the blues but maybe they are just off tune. Retail sales were a lot stronger than expected in November and that came on top of a solid October gain. Part of the explanation for the two solid months may have been that Black Friday sales started in October and really picked up steam early in November. In other words, there is no Black Friday, just a couple of months of Black Friday sales. That should have spread the spending over a longer period of time. Thus, December sales may be a little disappointing but the three months leading up to Christmas are probably going to be better than expected. Of course, the bar was set quite low so that is not saying much. Also, vehicle purchases have been robust and while that is great news for the dealers, it is causing consumer credit demand to jump. That means more debt and with refinancings disappearing, that implies rising debt service obligations and less money for other spending. That said, people are still buying just about everything out there including other big-ticket items such as furniture, electronics and appliances. We are eating out again, fixing up our homes and hitting the websites hard.
There was a huge surge in jobless claims last week. My response is big deal. It is hard enough to seasonally adjust these data on a weekly basis but when Thanksgiving comes at the latest date possible, the numbers have to be taken with a dump truck full of salt. Averaging the two weeks together gets us to 334,000 which is not that much above the four-week average, so I am not hugely concerned about this report. If it gets repeated, though, I will be.