This morning’s retail sales report was a bit of a pickle. On the one hand, the headline number was mediocre. On the other hand, the most notable weakness in autos, which had seemed based on other data to be strong.
It’s hard to figure out what gives.
In a note out this morning, Nomura tries to explain that all-in-all we should be quite happy with the data.
It’s a little convoluted, as it exes out all kinds of stuff due to weather, but ultimately it homes in on what’s key.
The control measure feeds into estimates for the consumer spending component of GDP and suggests a healthy round of spending to start the year. Lastly, our preferred measure of consumer comfort, the category of dining out, increased by a strong 0.6% in January. Dining out can be seen as one of the ultra-discretionary categories of spending that is typically the first place households will cut back on spending if confidence is faltering.
This dining out is the last line of the table here, and what’s key is that this is not just a strong pace of growth form last month, it’s an acceleration from December’s growth. A very good sign.