Retail sales increased 0.3% in October, the Census Bureau reports — in line with expectations. The annual growth rate for spending slipped modestly, advancing 4.1% for the year through last month vs. 4.4% in the previous update. Nonetheless, today’s data shows that the consumption trend on Main Street remains comfortably in the 4%-plus range, which has prevailed since March. One reason for expecting that sales will remain on a moderate growth path: falling gasoline prices, which have provided a substantial boost to disposable income lately.
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The monthly housing numbers for October start rolling in next week, which will renew the focus on the key question: Is this crucial sector of the US economy still a risk factor for the business cycle? Recent data looks a bit more encouraging vs. the softer trend from earlier in the year, but housing’s growth remains sluggish compared with the robust gains in 2012 and 2013. For the moment, however, the worst fears have receded, although it’s still unclear if the trend will stabilize at a lesser growth rate. We’ll have a clearer picture of what lies ahead after the next batch of figures arrive, starting with next week’s update (Nov. 19) on new residential construction. Meantime, let’s review how the numbers stack up on three key indicators: new home sales, existing home sales, and housing starts, followed by a look at the outlook for prices.
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