Today’s update on retail sales certainly lends more credence to the notion that the economy is stabilizing and perhaps even poised for modest growth. Indeed, the 2.7% rise in seasonally adjusted retail sales in August was the highest monthly increase since January 2006.
Even better, a closer reading of the report shows that gains were broad based–only furniture/home furnishing stores and building materials/garden equipment establishments posted lesser sales on the month, seasonally adjusted.
But we should be cautious in reading too much into the numbers. Keep in mind that motor vehicle sales lead consumption higher in August. The government’s cash-for-clunkers stimulus program was clearly a factor. But the auto phase of the government’s fiscal stimulus is history, at least for the moment.