Pedestrians holding Macy’s shopping bags in San Francisco, California, on Thursday, September 16, 2021.
David Paul Morris | Bloomberg | Getty Images
Economists predict that, driven by rising gasoline prices and early holiday shopping, retail sales will boom in October.
According to economists surveyed by Dow Jones, retail sales are expected to increase by 1.5%, up from 0.7% in September. Dow Jones found that excluding automobiles, sales are expected to increase by 1%, compared with 0.8% a month ago.
The Census Bureau will release a retail sales report on Tuesday, November 16th at 8:30 am Eastern Time.
Gargi Chaudhuri, Head of Investment Strategy for the Americas at BlackRock iShares, said: “People expect a strong number.” “That’s what the past two weeks have said. This will be a stronger-than-expected retail sales.”
Economists have been improving their forecasts, and the consensus numbers reported in October have been rising.
Barclays chief US economist Michael Gabon said that strong numbers will be an important signal that the economy is back on track. Gapen is expected to grow by 1.2%.
The October retail sales report is one of the earliest fourth quarter GDP data. Gapen expects the economy to grow by 5% in the fourth quarter, following an unexpected slowdown of 2% in the third quarter.
If this number is in line with expectations, “it tells us whether there is a recovery momentum at the end of the third quarter and entering the fourth quarter, and we are in very good condition,” Gabon said. “This will be another data point that confirms the soft patch story rather than slowing down.”
The retail sales report was released after the very strong October employment report 531,000 new jobs were created.
Chaudhuri said that in addition to getting rid of the latest concerns about Covid, consumers may spend earlier than usual, before the holidays, to make sure they can find the gifts they want to buy. “The reason is obviously that stories surrounding supply chain disruptions have always been a top priority for consumers,” she said.
Consumers have been worried about inflation. indeed, October Consumer Price Index An increase of 6.2%, the highest in more than 30 years.
As inflation concerns have intensified, consumer confidence has been deteriorating.this Consumer sentiment at the University of Michigan The index released on Friday unexpectedly fell from 71.7 in October to a 10-year low of 66.8 in the preliminary report in November.
Investors will pay close attention to whether the retail sales report provides clues for further increases in inflation.
Michael Schumacher, head of macro strategy at Wells Fargo Securities, said that investors in federal funds futures continued to push for interest rate hike expectations on Monday. Now, the June futures contract shows the possibility of raising interest rates.
After the strong CPI data last week, traders moved their bets on the first interest rate hike from September to July.
“There are some expectations that the Fed may accelerate its contraction,” Schumacher said. The central bank has stated that it will reduce the number of bond purchases per month, which will help it support the economy during the pandemic. This quantitative easing program is expected to end in the middle of next year. Economists said that once the plan is completed, the Fed is expected to raise interest rates.