November 23, 2020 –Retail Sales Disappoint, Import Prices Fall


US retail sales rose by only 0.3 percent in October, following a 1.3 percent increase in September. Economists are concerned they could slow further as virus cases keep rising and household income falls, as millions of unemployed Americans lose government financial support. As state governments impose restrictions and with people avoiding crowded spaces, retail sales growth could keep falling and unemployment may rise as we close in on the holidays. Growth estimates for the fourth quarter of 2020 are below a 5 percent annualized rate after growing 33.1 percent in Q3 and contracting 31.4 percent in Q2.

It was also reported last week that import prices fell 0.1 percent as the price of gas and other good declined.  In the 12-months through October, import prices fell 1 percent after falling 1.4 percent in September.  This indicates inflation will not pick up for a while.

Atlanta Fed President Raphael Bostic said, after the retail numbers were released, the central bank is prepared to step in with more policy help to get businesses and people through some potentially tough months ahead. He thinks current programs should continue “until we are well beyond this crisis period” but did not give any specifics.