November 16, 2021
Retail sales jumped 1.7% in October after climbing 0.8% in September and 1.2% in August. The October gain was larger than the 1.2% increase that had been expected. There were, in addition, modest upward revisions to the August and September data.
Motor vehicle sales climbed 1.8% in October after gaining 1.2% in September. It is important to remember that the retail sales data include not only new car and truck sales, but also used car and trucks, and automobile parts. Given that new cars are in short supply because of a shortage of semiconductors, consumers have been turning to the used car market to find the vehicle they need.
Retail sales ex autos and gas, which eliminates the two most volatile components, rose 1.4% in October after climbing 0.5% in September after jumping 2.2% in August..
The level of retail sales is far above the level of sales that existed prior to the recession. A large part of the jump in sales early in the year was attributable to the series of three tax refund checks that were distributed late last year and in the early part of this year. Sales rose more slowly during the summer months as the number of COVID cases began to climb.
However, sales have gathered momentum in recent months as the number of COVID cases has declined.
The one category of sales that has been slow to recover is restaurant and bar sales. However, with big increases in the past seven months restaurant sales are now 9.5% higher than their pre-recession level. As the re-opening process continues in the months ahead these sales should continue to climb.
With consumers spending freely we expect GDP growth of 8.0% growth in Q4. That gets us 5.7% GDP growth in 2021 and we anticipate growth of 4.9% in 2022..
Stephen Slifer
NumberNomics
Charleston, SC
Hi Steve,
How much of the $2T is going to large corporations vs small business?
Hi Brian,
There are tons of different pieces to that program. But it appears to me that the only “big business” that is getting money is the airline industry. Here are some of the highlights:
1. Every taxpayer receives $1,200 check. $500 extra per kid.
2. Unemployed workers get extgra $600/ week for up to 4 months. When couple with state benefits, some will be making more on unemployment than on their day job.
3. Hospitals get $100. Losing money because they are forced to postpone elective surgeries which is wher they make their money. I think they also get a bigger reimbursement from Social Security for treating COVID19 patients.
4. Airlines get $29 billion in grants, $29 billion in loans.
5. Small businesses get tax credit if they keep workers on the payroll.
6. State and local governments get $150 billion. They are losing sales tax and corporate profits + they have expenses involved with the corona virus like police, fire, EMT.
7. Defense Dept. gets $10.5 billion for deploying National Guard to distribute medical supplies, food, etc.
8 Employers get to defer the 6.25% payroll tax which is their portion of funding Social Security.
9. Payments in there for telemedicine, food stamps, farmers.
A little something for everybody.
Steve