US retail sales increased 0.3% in November, up from the 0.2% decline in October and exceeded economist expectations of a 0.1% drop. The rise has been said to be caused by increases in Online retail, motor vehicles and parts, furniture and sporting goods. In my opinion, online retail sales have likely risen due to seasonal changes and motor vehicles and parts can be somewhat attributed to higher prices of such goods, covered in the CPI readings. Furniture may have risen becuase of people upgrading their homes in anticipation of family coming over for Christmas, or due to homeowners not selling due to still high mortgage rates and are making do with what they have. I beleive sports equipment, like online sales, are attribruted to seasonality.
Core retail sales, which strips out automobiles, gasoline, building materials and food services, increased by 0.4%, suggesting that falling gasoline prices may have impacted the headline figure.
Given this report, economists now project higher spending growth in the 4th quarter, with expectations increasing from a 2% annualised rate to 2.75%.
This is surprising and suggests that interest rates are not biting consumers as hard as expected and may influence future FED interest rate decisions - with that said, the FED's latest meeting seemed to show optimism of rates falling 75bps next year.
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