Holiday Spending Supports US Economy as Inflation Signals Remain Mixed
Focus today will be on US retail sales and PPI data. Retail sales have sent mixed but generally stable signals through the second half of the year, supported by steady consumer demand and seasonal spending. Year over year growth remained solid, reflecting consumers continuing to spend despite higher interest rates and elevated prices. Private sector indicators supported this view. The National Retail Federation Retail Monitor showed that sales growth remained positive heading into the holiday season, with November and December posting modest month to month gains and year over year growth of around 3.5%. Core retail sales, which exclude autos and gasoline, also increased on both a monthly and annual basis, suggesting that underlying consumer demand stayed healthy rather than being driven by price swings in fuel or vehicle sales. With official Census Bureau retail sales data for November released today, expectations are shaped by these private reports, which point to continued strength during the holiday shopping period rather than a sharp slowdown.
At the same time, producer price data over the last six months has shown easing but still present inflation pressure at the wholesale level. The most recent published Producer Price Index data, covering September, showed a moderate monthly increase and an annual rise of about 2.7% or final demand. Earlier months in mid-year saw a mix of small increases and relatively flat readings, indicating that price pressures faced by producers were cooling compared with earlier in the inflation cycle. Core PPI readings remained contained, reinforcing the idea that broad based inflation was not re accelerating. Data releases for October and November were delayed by the federal government shutdown and are being published today, making this report especially important for markets. Based on the trend through September, producer prices appear to be rising at a steady but manageable pace, rather than showing signs of renewed inflation stress.
Taken together, the last six months paint a picture of a US economy where consumers are still spending, though more selectively, and where inflation at the producer level is no longer surging but has not disappeared. Today’s retail sales and PPI releases are expected to confirm resilient consumer activity during the holiday season and continued moderation in wholesale price pressures, helping investors and policymakers better judge how the economy is entering the new year.
Analysis by Coach Angel
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