Consumer confidence sags but retail sales chug along

Much has been made about the uncertainty that is clouding the economic outlook, including the recent dip in consumer confidence.

Whether one looks at the Conference Board’s survey, which reveals that confidence has returned to the low end of the range its been stuck in for 18 months, or the University of Michigan’s Index, which shows that sentiment has rolled over, many are losing faith in the recovery.

Surprisingly, however, so-called “core sales” are chugging along at a decent pace. Core sales exclude the volatile automotive category as well as sales at gasoline stations, which are whipsawed by the ups and downs in the price of gas.


(click to enlarge)

As the chart reveals, the downturn in core sales was not nearly as dire when the near collapse in auto sales and the impact of falling gasoline prices were removed.

Conversely, rising gasoline prices also exaggerated the rebound earlier in the year.

Still, given the troubling numbers coming from consumer confidence surveys, core sales have been holding up. 

Combined with timely data on weekly jobless claims, which have been holding in a narrow range since the start of the year, obituaries being written on the recovery are a bit premature.