Our theme that a new business cycle expansion began in 2016 is easy to see in basic industrial and material sectors we have highlighted in past newsletters.Less obvious is the persistent consumption trends since the 2008/2009 Great Recession. While consumers have been the backbone of most expansion cycles, they have been the only GDP component keeping our economy from a long economic winter this decade. Now that the industrial sector is making a comeback with a rare boost to the Investment component of GDP, consumers are even more optimistic. Euphoria surged upon Trump’s election and boosted our Merriment to finish 2016. It looks like 2017 will be even Merrier as the National Retail Federation estimates record spending in their most recent survey after the subdued decade that preceded.
Strong December data is not confirmed, but Retail Sales through November are now expanding at the best pace since February 2012. With Tax Cut benefits looming where even Fast Food workers are estimated to receive a 19% reduction in taxes, there should continue to be strong consumption trends in the 2nd half of 2018.
Weekly Same Store Sales reported by Redbook are also very strong. In the 12 year history of Same Store Sales reports, 5 to 6% rates of growth is the ceiling. We may breach 5% again soon. Don’t be surprised to see near 4% growth on average in 2018.
Most of us increasingly embrace the online shopping wave. Walmart, Alibaba and Amazon dominate. The e-commerce terminator has years to go before its steady usurpation of store purchases will slow. Current on-line trends are very healthy, replacing the record 7,000 brick and mortar stores that closed in 2017 during a “good economy”.Post Thanksgiving “cyber Monday” set a new record day of $6.6 Billion in sales, more than double the 2015 record. This is also the first year that on-line sales over the Holiday shopping season will surpass in-store purchases. Maybe FedEx and UPS need to arrive in costume next season for the declining in-store customers deprived of seeing their local mall Santa.
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