September retail sales rose 0.7% month-over-month building on a better-than-expected August.  Retail spending increased 0.7% in September on broad-based improvement after unexpectedly increasing 0.9% in August, and indication that consumer demand remains robust.  Economists expected a month-over-month decline of 0.2%, with estimates ranging from -0.8% to +1.0%.  In Tuesday’s research meeting, and in subsequent communications, we highlighted expectations for month-over-month figures to continue to be a bit noisy (+/-1%) despite spending levels that remain robust in absolute terms.  While the recent spike in COVID-19 cases dampened demand for services like travel and entertainment, Americans shifted their spending back to merchandise with eleven of thirteen categories posting increases.  For better or worse, strong demand for goods may place even more pressure on global supply chains which have struggled to keep up with demand.

September retail sales (real) up 8.5% year-over-year.  The value of retail sales has risen sharply this year, supported by government stimulus, elevated savings, and economic reopening enabled by the ongoing vaccine campaign.  For perspective, the total value of retail sales in September was $625B, compared to $526B in February 2020 (pre-pandemic) – see chart below.