by Bill McBride on 12/10/2012 08:29:00 PM
Monday, December 10, 2012
The WSJ had a front page article on consumer spending yesterday: Consumer Spending Wobbles . The article starts with "U.S. consumer spending, a rare pillar of economic strength in recent months, is showing signs of weakening."
Tim Duy takes exception to both the "pillar of strength" and "signs of weakening": Wobbly Consumers?
I am not sure who exactly believed that the US consumer is a "rare pillar of economic strength," but I suspect they were somewhat delusional and perhaps overemphasizing the importance of consumer confidence surveys. I don't think the consumer is falling off the cliff, fiscal or otherwise, just yet, but household spending hasn't been exactly a source of strength for several months now. The fragility of the sector is not new.Dr. Duy has a number of charts supporting his view.
I don't think we will see a huge surge in spending, but I think Duy is correct and we will see continued growth in consumer spending. As I mentioned on Friday, seasonal retail hiring is solid, and that is usually a good sign. The LA Times noted it today: Holiday retail hiring could break record set 12 years ago
Here is the chart I posted last Friday:
Click on graph for larger image.
Typically retail companies start hiring for the holiday season in October, and really increase hiring in November. Here is a graph that shows the historical net retail jobs added for October, November and December by year.
Retailers hired 465.5 thousand workers (NSA) net in November. The combined level for October and November is the highest ever. This suggests retailers are fairly optimistic about the holiday season. There is a decent correlation between retail hiring and retail sales, see: Retail: Seasonal Hiring vs. Retail Sales
As I wrote a month ago: "This is an old idea: Watch what they do, not what they say. And once again the retailers are hiring seasonal workers at a solid pace."
Tuesday economic releases:
• At 7:30 AM ET, the NFIB Small Business Optimism Index for November will be released. The consensus is for a decrease to 92.5 from 93.1 in October.
• At 8:30 AM, the Trade Balance report for October from the Census Bureau. The consensus is for the U.S. trade deficit to increase to $42.8 billion in October, up from from $41.5 billion in September. Export activity to Europe will be closely watched due to the European recession. Note: The strike at the ports of Long Beach and Los Angeles started in late November, and this report is for October.
• At 10:00 AM, the BLS will releases the Job Openings and Labor Turnover Survey for October. In general, job openings have generally been trending up.
• Also at 10:00 AM, the Monthly Wholesale Trade: Sales and Inventories for October. The consensus is for a 0.4% increase in inventories
Another question for the December economic prediction contest (Note: You can now use Facebook, Twitter, or OpenID to log in).