Consumers more sanguine, but they’re still bargain hunting

After Donald Trump won the presidential election, the upbeat tone of consumer confidence surveys and the ebullience of stock market investors had economy watchers expecting a strong month of retail sales in November.

After Donald Trump won the presidential election, the upbeat tone of consumer confidence surveys and the ebullience of stock market investors had economy watchers expecting a strong month of retail sales in November.

They were disappointed as sales rose just 0.1 percent. Peering inside the numbers from the Commerce Department, MarketWatch found weaker sales at car dealers (down 0.5 percent) and traditional department stores (down 0.2 percent).

The performance of Internet retailers, an increasingly popular option for Americans, wasn’t much better. Sales were up just 0.1 percent for them.

There was improvement in groceries and gasoline sales, and restaurants, but those are not the businesses that drive the economy. They’re the places where people spend money on their way to spending other money, only shoppers didn’t do a lot of that last month.

Perhaps it was because they were seeking better bargains than the stores were offering.

“The fundamentals of the household sector are still in pretty good shape,” Scott Brown, chief economist for Raymond James Financial Inc. in St. Petersburg, Fla., told Bloomberg. “The anecdotal information suggests that consumers are out there spending, even though they’re very much looking for discounts. That’s been a long-term story.”

Meanwhile, consumer prices rose in November for the fourth month in a row, a sign of the inflation the Federal Reserve expects to begin to tamp down with the quarter-point rate increase it approved last Wednesday.

The Labor Department said the Consumer Price Index rose 0.2 percent as gasoline, rent and used cars grew more expensive, although clothing and groceries got a bit cheaper.

“As the transitory influences of earlier declines in energy prices and prices of imports continue to fade, and as the job market strengthens further, we expect overall inflation to rise to 2 percent over the next couple of years,” Fed chairman Janet Yellen said Wednesday.

Excluding the volatile food and energy categories did not change the pace. The increase stayed at 0.2 percent.

The first major November reports on the housing industry last week were disappointing. The Commerce Department said Friday that housing starts fell 18.7 percent in November, to a seasonally adjusted annual rate of 1.1 million. Permits fell 4.7 percent, to 1.2 million.

Housing starts were at a nine-year high a month earlier. Despite the larger than expected decline, the Wall Street Journal said the number stayed at a level that suggests there is steady demand for single-family homes.

“The current message is one of optimism that single-family starts are going to continue to gain ground in the months ahead,” Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. in New York, said in a research note before the housing report that was cited in a Bloomberg story. “Whether recent sharp rises in interest rates have a dampening effect remains to be seen.”

Bloomberg also said home building during the fourth quarter has been at a faster pace, on average, than in the third quarter and that permits for single-family properties have increased.

Builder sentiment has been challenged by a recent rise in mortgage rates, limited numbers of skilled workers and shortages of available lots, but it surged in December, Bloomberg also said. There is optimism that Trump will ease regulatory burdens.

This week, the last before the holidays, we will see November reports on home resales (Wednesday) and new-home sales (Friday)

Other important reports scheduled this week include data on personal income and consumer spending on Wednesday and the University of Michigan’s final Consumer Sentiment Index for December on Friday.

On Dec. 9 the university’s preliminary index for the month came in at 98.0, one-tenth of a point below its 2015 peak, largely on the public’s reaction to Trump’s victory.

The fresh reading this week is likely to continue the upward trend. The new president won’t take office until January, so there is room for consumer optimism to grow without much resistance until Trump is inaugurated and begins to set policy the public can identify and measure.

Gus Faucher, deputy chief economist at The PNC Financial Services Group, remains optimistic about holiday season retail sales despite the November weakness, saying "the fundamentals for consumers are good."

In a research note that U.S. News & World Report quoted, Faucher said, “On a year-ago basis, total retail sales were up 3.8 percent in November, indicating that this will be a good year for holiday sales."


ABYC Foundation Seeks Nominations for Educator Award

The award recognizes “an outstanding instructor who is shaping future marine service technicians.”

P.R. Firm Rushton Gregory Signs ePropulsion

The Chinese manufacturer of electric propulsion products introduced a standardized lineup earlier this year.

Dometic Updates Pro-Trim System

The new design allows boaters to trim the outboard and adjust the jack plate without removing their hands from the wheel.

Brunswick Partners with Carnegie Robotics

Through the alliance, Brunswick aims to enhance its autonomous technology offerings.

Nicole Vasilaros to Depart NMMA

The group credits the senior vice president of government and legal affairs for “countless contributions to the protection and expansion of the recreational boating industry.”

Site Unseen

A website is often the first interaction a customer will have with a dealership, but it must provide more than an online brochure or they will click elsewhere.

C.G. Amends Documentation Rules

Federally documenting a boat now must be done every five years, rather than annually.

The 2021 Top 10 Most Innovative Marine Companies Awards

The marine industry consistently honors products and people. The industry, however, has not recognized forward-thinking companies that are moving the industry in new directions. Soundings Trade Only’s mission is to reflect, inform and inspire.