October retail sales are expected to be strong, showing economy is back on track
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On Thursday, September 16th, 2021, pedestrians carried Macy’s shopping bags to San Francisco, California.
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Economists expect a boom of October retail sales thanks to higher gasoline prices and holiday shopping.
Dow Jones polled economists and found that retail sales were expected to increase 1.5%. This is an improvement on September’s 0.7% growth. Dow Jones’s forecasts show that retail sales will increase by 1%, which is 0.8% less than the 0.8% rise in September.
On Tuesday, November 16, at 8:30 AM, the Census Bureau will publish its retail sales report. ET.
Gargi Chaudhuri of BlackRock’s iShares Americas investment strategy said, “There is an expectation for a strong number.” “That’s the narrative of the last two weeks, that this is going to be a stronger-than-expected retail sales.”
Economists are increasing their expectations and consensus numbers for the October report have been growing.
Michael Gapen, Barclays’ chief U.S. economist said that a strong figure will signal the economy is on its way back. Gapen anticipates an increase of 1.2%.
Potential insight into economic growth
This October retail sales report provides the first readings of fourth-quarter GDP. Gapen predicts that the economy will expand by 5% during the fourth quarter after the surprising slow pace of 2% in the third quarter.
Gapen indicated that the expected number will be a sign of “whether there is momentum that has been restored at the conclusion of the third quarter” and is in good condition heading into the fourth, if so, It would confirm the softening story, rather than slowdown.
This retail sales report is coming after an extremely strong October employment report. 531,000 payrolls added.
Chaudhuri stated that consumers are spending more than usual to ensure they can find the gift they desire. She explained that consumers have been focusing on the supply chain disruptions story because it is so prevalent.
Inflation future clues
The inflation fears of consumers have worried them. The inflation rate is actually quite high. consumer price index for OctoberThe increase was 6.2%, which is the highest level in over 30 years.
Consumer sentiment has become increasingly sour due to the rising inflation worries. This is the University of Michigan’s consumer sentiment index, released Friday, showed a surprise drop to a 10-year low of 66.8 in the preliminary November report, from 71.7 in October.
The retail sales report will provide clues for investors to monitor and see whether they are encouraging further inflation increases.
Michael Schumacher of Wells Fargo Securities is the head for macro strategy. He said that investors in Fed Funds futures continue to expect a rate increase. A strong chance of a rate rise is evident in the June futures contract.
Traders shifted their focus to July after last week’s robust CPI data. This was in preparation for the first rate increase.
Schumacher stated that there was some hope the Fed would accelerate its tapering. Schumacher stated that the central bank would reduce its monthly bond purchases. These have been crucial in supporting the economy during the crisis. It is anticipated that this quantitative easing program will be ended by mid-2019. According to economists, once the program has been completed, it is possible for the Fed to increase interest rates.
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