Friday, October 15, 2010

Retail sales well on the road to recovery

Retail sales in September rose by more than expected, resulting in strong 7.3% growth over the past 12 months (top chart). The bottom chart zeros in on the level of retail sales to show how they have nearly recovered from the big collapse of late 2008. Taken together with the relatively strong showing from imports in August (see previous post), this confirms that consumers are doing fairly well despite the persistence of high unemployment.

As a supply-sider, I don't attach a lot of importance to measures of consumer demand such as retail sales. Instead I think this is more a barometer of the general health of the consumer sector, and as such it corroborates much of the evidence of an ongoing economic recovery. At the very least, it is solid evidence that there is no double-dip recession underway.


Benjamin Cole said...

The light at the ned of the tunnel.

"Federal Reserve Chairman Ben S. Bernanke on Friday laid out a case for the central bank to take further action to bolster growth, citing the risks of prolonged high unemployment and a U.S. economy slipping into a deflationary spiral.

In a much-anticipated speech in Boston, Bernanke did not spell out details of how and when the Fed would take action. But the first option that he mentioned was a program of buying additional assets, namely government bonds, in an effort to drive down long-term interest rates and stimulate economic growth.

The central bank is widely expected to announce such a program, known as quantitative easing, at the conclusion of its next policymakers' meeting on Nov. 2 and 3."


We are lucky to have Bernanke as Fed chief now. He studied the Great Depression in detail, and served as an adviser to Japan, and saw the results of Japan's tight money policies. (You san see for yourself Japan is entering its 18 month of deflation, and 20th years of asset depreciation).

Bernanke is the picture of sobriety, calculation, intelligence. Somehow, the USA comes up with the right guys when we really need them.

Benjamin Cole said...

The Consumer Price Index, a key measure of inflation, rose 1.1% over the last 12 months ending in September, the Bureau of Labor Statistics said Friday, unchanged from the previous month. Any number above zero means prices are rising, but a rate around 1% is considered slow growth.

Factoring in the Boskin adjustment, we are at zero inflation for the last 12 months.

Inflation, Jimmy Hoffa, the Los Angeles Dodgers, freedom in Cuba--dead, dead, dead.

John said...


I share your admiration of Ben Bernanke.