October's retail sales numbers are out, and the news is good. Retail sales posted a better than expected 1.4% gain. Retail sales numbers generally follow pro-cyclically with recessions, so this increase is a very good sign.
We had seen a drop in consumer sentiment not too long ago that I feared would show in retail sales numbers. While that drop wouldn't have had its full effect until November's retail sales numbers came out, a strong showing in October is a very good sign.
Breaking down the numbers we see some interesting trends. Retail sales only includes sales of goods (not services) which is less than half of total consumption. Pulling auto sales out of this number, we only saw a .2% growth—less than September's .4% and far less than August's 1%. What's interesting is that the Cash for Clunkers program has ended, yet we still see growth in the auto market.
All-in-all this is a great news. Regardless of the size of the increases, retail sales have established a clear upward trend.
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