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Retail sales well on the road to recovery

Retail sales in September rose by more than expected, resulting in strong 7.3% growth over the past 12 months (top chart). The bottom chart zeros in on the level of retail sales to show how they have nearly recovered from the big collapse of late 2008. Taken together with the relatively strong showing from imports in August (see previous post), this confirms that consumers are doing fairly well despite the persistence of high unemployment.

As a supply-sider, I don't attach a lot of importance to measures of consumer demand such as retail sales. Instead I think this is more a barometer of the general health of the consumer sector, and as such it corroborates much of the evidence of an ongoing economic recovery. At the very least, it is solid evidence that there is no double-dip recession underway.

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