The Independent Market Observer

Monday Update: Consumers Still Shopping

Posted by Brad McMillan, CFA®, CFP®

Find me on:

This entry was posted on Nov 21, 2016 3:17:20 PM

and tagged In the News

Leave a comment

monday updateLast week’s economic data offered an encouraging picture of where the Trump era will be starting from.

A look at last week’s data

Consumers willing to keep spending. The retail sales report showed that consumers continued to spend, despite the turmoil of the election.

  • Headline sales, which include autos, grew by 0.8 percent in October, significantly faster than expected, and the previous month’s growth was strong as well, at 0.6 percent.
  • Core retail sales, excluding autos and gas, also significantly beat expectations, at 0.6 percent growth, and the prior month was revised upward from growth of 0.3 percent to 0.5 percent.

Industrial production disappoints. Industrial production data came in worse than expected—flat for October and with a downwardly revised decline of 0.2 percent in the previous month. The weakness was weather related, however, as utility production dropped during the third-warmest October on record. Manufacturing output did better, up by 0.2 percent for the second month in a row, and mining output, which includes oil production, had the biggest rise in more than two years. Although the data wasn’t great, the details were better than the headline number suggested, and the manufacturing figures show continued slow growth.

Housing starts jump. The National Association of Home Builders (NAHB) survey remained stable at 63, a very solid figure. Housing starts, on the other hand, popped from 1.047 million to 1.323 million, well above expectations of 1.156 million and the highest level since before the financial crisis. On a 12-month average basis, housing starts are also at their highest point since before the crisis. This result suggests that consumers are very positive about the economy and that housing will remain a tailwind. 

Inflation seems contained. As expected, the consumer price index increased by 0.4 percent in October, up from a monthly increase of 0.3 percent the previous month; it increased by 1.6 percent on the year, up from 1.5 percent, largely due to higher energy prices. Core consumer prices, excluding food and energy, increased by 0.1 percent, the same as the previous month and less than the expected 0.2 percent, while year-on-year changes dropped to 2.1 percent. The increase in oil prices is driving the two measures to converge, but inflation pressures overall remain contained.

The week ahead

Following up on last week, this week’s data will include looks at housing and industry, as well as possible insight into the Fed’s thinking.

Slated for release on Tuesday, existing home sales are expected to drop slightly, from 5.47 million to 5.44 million, constrained by a lack of inventory, with homes for sale close to a 15-year low. New home sales, released on Wednesday, are expected to drop slightly as well, from 593,000 to 590,000.

Also on Wednesday, the durable goods orders report will provide a snapshot of business confidence and the manufacturing outlook.

  • The headline order number, which includes aircraft, is expected to bounce from a decline of 0.3 percent to a gain of 1.1 percent, with significant upside potential. Such a bounce would likely be due to the notoriously volatile commercial aircraft segment.
  • Core orders, which exclude transportation, are expected to show a more modest increase, from growth of 0.1 percent to 0.2 percent, which would ratify the continued slow improvement in the manufacturing data from other surveys.

Finally, also on Wednesday, the minutes of the latest meeting of the Federal Open Market Committee will be released. Expectations are low for any real new news here, but analysts will be looking for hints as to what, if anything, might derail a December rate increase.

Happy Thanksgiving!

  Subscribe to the Independent Market Observer

Subscribe via Email

New call-to-action
Crash-Test Investing

Hot Topics

New Call-to-action



see all



The information on this website is intended for informational/educational purposes only and should not be construed as investment advice, a solicitation, or a recommendation to buy or sell any security or investment product. Please contact your financial professional for more information specific to your situation.

Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is not indicative of future results. Diversification does not assure a profit or protect against loss in declining markets.

The S&P 500 Index is a broad-based measurement of changes in stock market conditions based on the average performance of 500 widely held common stocks. All indices are unmanaged and investors cannot invest directly in an index.

The MSCI EAFE (Europe, Australia, Far East) Index is a free float‐adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the U.S. and Canada. The MSCI EAFE Index consists of 21 developed market country indices.

One basis point (bp) is equal to 1/100th of 1 percent, or 0.01 percent.

The VIX (CBOE Volatility Index) measures the market’s expectation of 30-day volatility across a wide range of S&P 500 options.

The forward price-to-earnings (P/E) ratio divides the current share price of the index by its estimated future earnings.

Third-party links are provided to you as a courtesy. We make no representation as to the completeness or accuracy of information provided on these websites. Information on such sites, including third-party links contained within, should not be construed as an endorsement or adoption by Commonwealth of any kind. You should consult with a financial advisor regarding your specific situation.


Please review our Terms of Use

Commonwealth Financial Network®