We’re about to get another great read on Q4 GDP tomorrow, and actually, more crucially, the health of the consumer, courtesy of retail sales at 8:30 AM.The official expectation is for 0.7% on the headline, and 0.4% ex-auto.
Here’s Deutsche Bank, which has been very bullish on Q4 GDP:
Given our assumption that the household savings rate is stabilizing and the labour market is getting healthier—we see this in employee tax withholding receipts—we project a noticeable improvement in consumer spending over the coming quarters. The sequential quarterly annualized changes over the past four quarters were 0.9%, 1.9%, 2.2% and 2.6%. We project 3.0% in the current quarter and 3.3% for 2011. The surprising strength in November unit motor vehicle sales (12.3M vs. consensus expectations of 11.8M) bodes positively for headline retail sales, which we project a +0.8%. Higher gas prices and decent chain-store sales point to a 0.5% increase excluding autos. The retail data are additionally important because the composition and level of sales could also shed insight on the outlook for the holiday shopping season. As usual, be mindful of revisions, as they can be significant. Retail sales were revised higher in the last report.
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