Even the new iPhone couldn’t save retail sales in September.
On Wednesday, the September report on retail sales from the Census Bureau showed sales rose just 0.1% last month, missing expectations. Excluding cars, retail sales fell 0.3% in September.
And of course the broader disappointment here is that with the decline in gas prices over the last year, many economists expected these savings to make their way into other parts of the economy.
This has consistently not been the case (at least not to the extent many had called for).
When you think of a driving force of consumer spending in the economy, Apple — and in particular the iPhone — is something that often comes to mind. But even the latest iPhone didn’t boost consumer spending in September.
In a note to clients on Wednesday following the report, Capital Economics’ Paul Ashworth wrote, “
Lower gasoline prices don’t appear to have spurred spending on other goods and services. Moreover, the release of the new iPhone model towards the end of last month didn’t do much to boost electronics sales, which actually contracted by 0.2% [month over month].”
Chris Rupkey at Mitsubishi UFJ said simply, “We aren’t sure what the consumer was doing in September.”
Ashworth now expects inflation-adjusted consumption will rise 3% at an annualized pace in the third quarter, less than the 3.6% increase previously expected. Ashworth added that Capital Economics now expects the economy grew 2% in the third quarter.
Now, it’s worth keeping in mind that retail sales are based on the dollar value of sales not the volume of goods sold.
And with inflation looking tepid, as seen in data points like Wednesday’s producer price index which showed prices fell in September, retail sales look perhaps a bit more discouraging at first blush than they are under the hood.
Last month, for instance, we highlighted the following chart from Rick Rieder at BlackRock, which shows that the amount of stuff people are buying is increasing though the price of this stuff isn’t.
And so as has been the case for most of this year, another mixed readings on the US economy.
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