Diane Swonk, Chief Economist
Dec. 11, 2009 – 8:30 a.m. CT
Consumers Showing Some Holiday Cheer
Retail sales surprised by surging 1.3% from October to November – several multiples greater than what most economists were expecting. The data for September through October, however, was revised down a bit.
An increase in prices at the gas pump accounted for at least some of the surprise – spending at the pump surged almost 9% from the prior month. Spending at general merchandise stores and online shopping also picked up slightly, in response to heavy discounting. We even saw some bounce in discretionary spending, as consumers returned to bars and restaurants. The only major weak spots were spending at furniture and specialty clothing stores.
This, coupled with favorable trade and inventory data released earlier in the week, suggests that real GDP could come in closer to 4% instead of 3% in the fourth quarter, which is still weak relative to what it should be at this stage of the recovery, but better than where we could be today, given the turmoil we have endured.
The question for December: Did heavy discounting in November borrow from spending in December? The jury is still out, but preliminary surveys suggest that this may be the case. The recovery is here, but is still extremely fragile.
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