Some market watchers are interpreting Tuesday’s better-than-expected US retail sales report as a sign that the US consumer is starting to come back.
But a look behind the December numbers shows that the much heralded return of the US consumer is likely to be delayed a bit longer.
While the headline month-over-month sales number indicated a 0.5% advance from November, adjusted December retail sales grew 4.7% year over year. This does represent an improvement from a summer low of 3.5%, but it’s still well below a peak of 9.2% 18-months ago.
More importantly, much of the recent improvement has been driven by just one item: cars. Since bottoming in 2009, US auto sales have surged to an annualized rate of 15.3 million from 9 million.
Outside of autos and food, the month-over-month gains are much less impressive. Stripping out these two components, retail sales rose by just 0.1% in December – after contracting by 0.3% the previous month (see below). Based on this measure, retail sales have been soft for the past three months.