Retail sales beat expectations with a moderately strong 0.5% rise in December (seasonally adjusted), the Census Bureau reports. After stripping out gasoline sales, retail purchases rose even more, advancing 0.8% for the month. The numbers look encouraging on a year-over-year basis too, with retail sales advancing 4.7% for the 12 months through December. That's up a decent amount from November's 4.1% annual rate. The main takeaway in is that retail sales ended 2012 on a strong note, which puts another nail in the coffin for predictions that the economy wouldn't escape last year without stumbling into a new recession.
[Related -Health Care SPDR (ETF)(NYSEARCA:XLV): The Only ETF You Need To Own – For September]
December's pop in consumption was broadly distributed, with most major sectors of the retail space posting gains. The two exceptions: gasoline sales and electronic/appliance stores. Nonetheless, the relatively strong, broad-based jump in retail sales last month adds another data point on the side of growth for the December economic profile.
[Related -CONN'S, Inc. (CONN) Q2 Earnings Preview: The BIG Move Quarter]
The conspicuous year-end upturn in the annual rate of growth is particularly encouraging as it suggests that the deceleration in the trend has hit a floor. In turn, that's a signal that consumer spending isn't collapsing, as some analysts have been predicting.
Reviewed in context with a broad array of economic and financial indicators, today's retail sales report drops another clue for anticipating that 2012 will remain recession free when the final numbers are published on the business cycle via NBER. In fact, there's been minimal evidence all along in support of the claim that the economy was slipping over the cyclical edge. Month after month, the updates of The Capital Spectator Economic Trend Index have shown that recession risk has remained low. That was true in last week's update, its predecessor in early December, its counterpart in November, and so on, back through the previous months.
Notice a trend? I do. An expansive review of the numbers, across a wide spectrum of the economy and the markets, dispenses useful information for analyzing the business cycle. It's not magic, but a sober reading of the numbers helps... a lot! Yes, you can see a bit deeper if you look a bit broader when it comes to macro.
Today's retail sales update alone could be an outlier, of course. But in the context of the generally positive December data that's piling up, it's hard to ignore the writing on the wall when it comes to evaluating the economy's 2012 exit point. Nonetheless, the primary mission is to look for warning signs... from multiple perspectives. For now, thankfully, those warning signs are in the minority.
There are more economic reports to come to complete the December profile, and it's always dangerous to assume too much, one way or the other. Nonetheless, the numbers in hand so far offer scant statistical support for painting a dark picture of the primary trend. January and beyond, of course, are wide open for debate. On that note, we can't dismiss the potential for a self-induced recession in the new year, courtesy of our representatives in Washington via the debt ceiling debate.
Using the numbers available today, however, tells a relatively bright story. That's no insurance policy against the uncertainty of tomorrow, but it ain't hay either.