September retail sales blew past expectations (+1.1% vs. +0.8%), and already-strong August sales were revised upwards from +0.8% to 1.2%. That adds up to a gain of 2.3% in two months, and that reverses all of the decline we saw in the second quarter and then some. As the second chart above shows, even after subtracting inflation, real retail sales have reached a new high, despite the fact that there are 4.5 million fewer jobs today (3.3% fewer) than there were at the prior high in sales.
As the chart above shows, the strength in retail sales goes beyond just the auto sector, where sales have surged at a 14.5% annualized rates since the recession low. This is a broad-based recovery in retail sales.
This last chart zooms in on nominal sales in the past 13 years for a better perspective on recent developments.
Needless to say, there is no sign of anything like a recession in these numbers.
So why then do we need QE?
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