- by New Deal democrat[NOTE: I’ll report separately on industrial production later this morning.]Real retail sales is my bellwether for the health of the consumer. And after 3 months of declines, we got a huge upturn in January. Before adjusting for inflation, retail sales jumped 5.3% - not annually, 5.3% in one month! After adjusting for inflation, sales were up 5.0%, to a new all-time high:This is simply very good news, and adds to the evidence that, once the pandemic is under control, the economy is going to accelerate.I also use retail sales as a very good short leading indicator for employment. Because the series is somewhat noisy, I use the YoY% change (which was up 6.0% in real terms) to anticipate what is likely to happen with the jobs numbers several months down the road. And
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[NOTE: I’ll report separately on industrial production later this morning.]
For the past 2 months I have written that “I continue to expect employment to continue to rise - with a lag, and quite possibly a pause during this winter as the pandemic continues to rage - to match the level of sales.” Last month I added that “we certainly got the ‘pause’ in December’s employment report, and if we get more initial jobless claims reports like yesterday’s, a further downturn. But I still expect employment to rise to meet sales once the winter surge in cases and shutdowns of outdoor activities including dining both abate.” That is still my opinion, reinforced by this morning’s retail sales report.