US Consumer Stumbles As Retail Sales Unexpectedly Tumbles In September

After a mixed picture in August (core retail sales disappointed modestly, headline beat), expectations were just as mixed for September but September retail sales drastically disappointed:

The value of overall sales fell 0.3% in September from the prior month after an upwardly revised 0.6% increase in August...

Source: Bloomberg

Sales in the closely watched “control group” subset - which some analysts view as a more reliable gauge of underlying consumer demand - were little changed, missing projections for a 0.3% increase. The measure excludes food services, car dealers, building-materials stores and gasoline stations.

Where business increased...

  • Furniture and Home Furnishings: 0.6%

  • Health and Personal Care: 0.6%

  • Clothing and Accessory stores: 1.3%

  • Miscellaneous Store Retailers: 0.5%

  • Food service and Drinking places: 0.2%

Where business slowed...   

  • Motor vehicles and part retailers: -0.9%

  • Building Materials and Garden Equipment: -1.0%

  • Gasoline Stations -0.7%

  • Sporting Goods, Hobby, Musical and Book stores: -0.1%

  • General Merchandise Stores: -0.3%

  • Nonstore retailers: -0.3%

Source: Bloomberg

And the antithesis of that, Department Stores continue their string of weakness (only had a positive YoY print just twice in the past 8 years) and Electronics & Appliances sales are down YoY for 11 straight months.

On a YoY basis, while growth is still strong, retail sales growth slowed notably in September...

Source: Bloomberg

The surprise drop in retail sales is the first decline since February and may indicate cracks are forming in the consumer spending that's propped up economic growth in recent months (after household consumption grew in the April-June period at the fastest pace since 2014).

How long before Trump demands more rate cuts?