Retail sales look quite strong

Retail sales are growing strongly, up 7.6% in the past year, and up at 9.9% annualized rated over the past six months. Rising gasoline prices have contributed to this strong growth, of course, but even excluding autos and gasoline, sales are up at a 6.2% annualized pace in the past six months.

It's interesting therefore to compare the recent period of strong gasoline price rises with what happened to retail sales the last time we had a huge spike in oil and gasoline prices. The chart above does just that: the white line being retail sales, and the orange line oil prices. Note that in late 2007 and early 2008 retail sales hardly budged despite soaring oil prices, whereas over the past two years both oil prices and retail sales have soared. Things are certainly different this time around. The rise in retail sales of late owes its strength not only to higher prices, but also to more jobs, rising confidence, easy money, and a global recovery.