AMERIPRISE FINANCIAL, INC.
Making Sense of the December Retail Sales Report
01/14/2015 | Russell Price
• Bad weather along the West Coast and a rising tide of gift card giving likely weighed on December's core retail results.
• Overall, consumers still have a lot going for them in the current environment and unless we've suddenly become a much thriftier society, people will eventually spend those extra dollars.
• Excluding gasoline sales, retail trends in general are healthy.
It would be a mistake, in our opinion, to look at the December retail sales report as an indication of deteriorating consumer trends. Consumers still have a lot of positives flowing in their favor, from rising incomes, to better balance sheets, to much lower energy costs.
Unless we've suddenly become a much more frugal society, people will eventually spend their extra dollars as their incomes grow, their costs moderate, and their confidence levels rise, all of which have clearly been occurring.
If we exclude much of the noise in the report, primarily lower gas prices, core retail sales were still a healthy 4.3 percent higher year-over-year and a strong 5.0 percent higher for the quarter. These are fairly healthy levels that we think should grow in the months and quarters ahead.
The drop in December core retail sales was also likely constrained by the growing use of gift cards for holiday giving. Businesses do not register a gift card sale until the card is redeemed for actual goods or services and this growing trend seems to be shifting more and more holiday sales into the first quarter. According to a survey by the National Retail Federation, holiday shoppers expected to increase their spending on gift cards by approximately 6 percent this year, to $172, out of total average gift spending of $804.
Eight of the last ten retail sales reports were ultimately revised higher. Only one was revised lower and that was November (retail sales figures for August 2014 have been unrevised).
Important Disclosures:
The views expressed are as of the date given, may change as market or other conditions change, and may differ from views expressed by other Ameriprise Financial associates or affiliates. Actual investments or investment decisions made by Ameriprise Financial and its affiliates, whether for its own account or on behalf of clients, will not necessarily reflect the views expressed. This information is not intended to provide investment advice and does not account for individual investor circumstances. Investment decisions should always be made based on an investor's specific financial needs, objectives, goals, time horizon, and risk tolerance.
Ameriprise Financial Services, Inc. Member FINRA and SIPC.
© 2015 Ameriprise Financial, Inc. All rights reserved.
01/14/2015 | Russell Price
• Bad weather along the West Coast and a rising tide of gift card giving likely weighed on December's core retail results.
• Overall, consumers still have a lot going for them in the current environment and unless we've suddenly become a much thriftier society, people will eventually spend those extra dollars.
• Excluding gasoline sales, retail trends in general are healthy.
It would be a mistake, in our opinion, to look at the December retail sales report as an indication of deteriorating consumer trends. Consumers still have a lot of positives flowing in their favor, from rising incomes, to better balance sheets, to much lower energy costs.
Unless we've suddenly become a much more frugal society, people will eventually spend their extra dollars as their incomes grow, their costs moderate, and their confidence levels rise, all of which have clearly been occurring.
If we exclude much of the noise in the report, primarily lower gas prices, core retail sales were still a healthy 4.3 percent higher year-over-year and a strong 5.0 percent higher for the quarter. These are fairly healthy levels that we think should grow in the months and quarters ahead.
The drop in December core retail sales was also likely constrained by the growing use of gift cards for holiday giving. Businesses do not register a gift card sale until the card is redeemed for actual goods or services and this growing trend seems to be shifting more and more holiday sales into the first quarter. According to a survey by the National Retail Federation, holiday shoppers expected to increase their spending on gift cards by approximately 6 percent this year, to $172, out of total average gift spending of $804.
Eight of the last ten retail sales reports were ultimately revised higher. Only one was revised lower and that was November (retail sales figures for August 2014 have been unrevised).
Important Disclosures:
The views expressed are as of the date given, may change as market or other conditions change, and may differ from views expressed by other Ameriprise Financial associates or affiliates. Actual investments or investment decisions made by Ameriprise Financial and its affiliates, whether for its own account or on behalf of clients, will not necessarily reflect the views expressed. This information is not intended to provide investment advice and does not account for individual investor circumstances. Investment decisions should always be made based on an investor's specific financial needs, objectives, goals, time horizon, and risk tolerance.
Ameriprise Financial Services, Inc. Member FINRA and SIPC.
© 2015 Ameriprise Financial, Inc. All rights reserved.
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