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In terms of economic data, the gold standard for excitement is the monthly jobs report.On the first Friday of each month, we find out how many new jobs were created in the previous month and what the unemployment rate is. It’s exciting for many reasons. It’s the datapoint that people care about and relate to most. Politicians care about jobs. People get what the report means.
But for a while they haven’t been so exciting. For one thing, they’re not as fun after an election, since the stakes are seen as lower. Also they’ve been incredibly steady lately. Also, the market doesn’t get that worked up by the jobs report, in part due to the fact that they’re subject to big revisions.
If you’re looking for a thrill, then check out tomorrow’s retail sales report.
Citi’s Steven Englander called the report The Most Important Datapoint This Year because it’s the first good pulse we’ll get on the consumer since the payroll tax holiday disappeared. The crucial question for 2013 is whether or not the recovery can survive tighter fiscal policy (higher payroll taxes, lower spending growth). And this is our first really big indication of that.
Yesterday, in an “On Our Minds Today” note, SocGen’s Brian Jones explained how this Wednesday’s retail sales report is the first big piece of the Q1 GDP puzzle.
While the number has a lot of moving parts (there’s a volatile headline number, which can include stuff like gas, which isn’t as economically meaningful), SocGen advises looking at the core “control” section of the report.
Sans the aforementioned decline in vehicle purchases, however, retail sales probably quickened, rising by 0.6% or double the reported December pace. Further excluding a weather-induced pickup in building materials purchases (0.4%) and the projected decline in gasoline station sales (-1.1%), retail “control” – the portion of the Census Bureau’s canvass that the BEA uses to cobble together nominal goods spending estimates – is forecast to jump by 0.9% – the largest increase since January 2012. Warmer-than-normal temperatures likely provided a significant lift to building materials, clothing, general merchandise and restaurant sales last month. Our estimate, if realised, would place the closely followed sales metric a healthy 6.2% annualized above its October-December average, after a 4.1% Q4 advance.
Meanwhile, Jones expects to see some upward revisions to earlier months.
So the stakes are big. Expectations for a strong report, with the consumer coming out of the gate are high. And this report should say a lot about the US economy.
We’ll be covering tomorrow at 8:30 AM ET.
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