Dec 05 Business Inventories & Retail Sales
Retail Sales +2.3% vs prior revised down to +0.4%. Ex auto +2.2% largest gain since Dec 99. Sales of autos & parts +2.9% confirming that MoTown rebounded on year end discounts and incentives.
Inside the number: ex auto & gasoline (+5.5%); retail sales +1.8% largest gain since March 04. Curious observation: Non-store retailers (e-shopping and mail-order) were the only major category with declining sales, -2.6%, the biggest drop since September 2001.
Business Inventories Dec +0.7% vs Nov revised up to +0.6%. Inside the number: unadjusted ex auto inventories plunged TEN 10% in one month, hitting a record razor thin inventory to sales ratio of 1.01 months.
Inventory that was clogging the pipe at year end, got passed. Even though seasonally adjusted inventories increased, they could not keep up with year end blowout sales.
Cleveland Fed president Sandra Pianalto suggested that the Q4 GDP gain at 1.1%, was deceptively low.
Taken together, if the trend in these reports (and others) continues, Q1 GDP estimates will be revised upwards to 3.5% or higher.
This leads us to also believe the Fed will not stop at 5%, they will probably bump 25 bps at each of the next four meetings bringing Fed Funds to 5.5%.
Full report
Inside the number: ex auto & gasoline (+5.5%); retail sales +1.8% largest gain since March 04. Curious observation: Non-store retailers (e-shopping and mail-order) were the only major category with declining sales, -2.6%, the biggest drop since September 2001.
Business Inventories Dec +0.7% vs Nov revised up to +0.6%. Inside the number: unadjusted ex auto inventories plunged TEN 10% in one month, hitting a record razor thin inventory to sales ratio of 1.01 months.
Inventory that was clogging the pipe at year end, got passed. Even though seasonally adjusted inventories increased, they could not keep up with year end blowout sales.
Cleveland Fed president Sandra Pianalto suggested that the Q4 GDP gain at 1.1%, was deceptively low.
Taken together, if the trend in these reports (and others) continues, Q1 GDP estimates will be revised upwards to 3.5% or higher.
This leads us to also believe the Fed will not stop at 5%, they will probably bump 25 bps at each of the next four meetings bringing Fed Funds to 5.5%.
Full report
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