Retail sales in November jumped a better-than-expected 0.8%, which comes on top of an upward revision to the month of October. Sales ex-autos improved a more robust 1.2%, suggesting that the economic recovery continues to gain traction, despite the weak payroll number last month.
Excluding an outsized 5.6% rise in gasoline station sales, which filters out rising prices at the pump, and a 0.8% dip in auto sales, so-called core sales were up an impressive 0.8%, signaling a fast start to the 2010 Christmas shopping season.
The strong rise last month may have been influenced by large promotions being offered at an ever-earlier date by retailers hoping to entice bargain-conscious consumers into their stores. And we’ll get a better picture when December’s figures come out next month.
Still, year-over-year core sales (see chart above) are not only increasing, they are rising at an ever-quickening rate, indicating that consumers are awakening from their recession-induced slumber amid the rise in consumer confidence and pick up in economic activity.
In addtion, core sales are now firmly above the peak reached as the economy entered the recession (see chart below).
Looking ahead, the extension of all of the Bush-era tax cuts for another two years and a continuation of emergency unemployment benefits will take some of the uncertainty out of the economic equation.
In addition, a partial social security payroll tax holiday in 2011, which is also part of the bill that seems destined to become law, should provide even more fuel for the recovery early next year.
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