Retail Sales indicate a solid back-to-school shopping season – The Daily Tearsheet

Vital Statistics:

Stocks are flattish this morning as the Fed begins its meeting. Bonds and MBS are up small.

Retail Sales rose 0.6% MOM in August, according to the Census Bureau. This non-inflation adjusted number rose 5.0% on an annual basis. Nonstore retailers (Amazon.com) led the charge. Gasoline and home improvement declined.

The August retail sales report captures the back-to-school shopping season, which is usually a good predictor of the holiday shopping season. This should be supportive of the US economy going forward.

A DC court has ruled that Lisa Cook cannot be fired for mortgage fraud, so she will probably be voting at the next Fed meeting. The vote was predictably straight down party lines with the two Biden appointees ruling in favor of Cook and the one Trump appointee ruling against. It will be interesting to see if she dissents if the Fed decides to cut the Fed Funds rate.

Separately, the Senate confirmed Lisa Cook’s replacement Stephen Miran last night.

Shelter inflation continues to work its way lower as home price appreciation slows and asking rents have been declining for two years. Shelter inflation has been the biggest driver of inflation over this cycle, and this effect is nearly played out.

The NAHB’s real rent index shows that rental inflation is moving up at exactly the same pace as core inflation. This index was up 0.1% in 2024, which means rents were rising at a faster pace than inflation.

In comparison, Apartment.com shows median rents have been declining.

The Apartment.com numbers are also reflected in the rising multifamily vacancy rate which just hit 7.1%. This is the highest for the index which goes back to 2017.

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