Strong retail sales continue to surprise
New sales data confirmed Tuesday that retailers are poised to show their best holiday season in three years, but consumer confidence showed an unexpected drop this month, feeding concerns that shoppers will pull back in the new year and that jobs will remain scarce.
Retail sales for the week that ended Saturday rose 4.8 percent compared with the year-earlier period, according to new data from the International Council of Shopping Centers and Goldman Sachs.
That puts retail sales for November and December on track to rise 4 percent compared with a year ago and hit the high end of a holiday forecast range that ICSC and Goldman had already raised two weeks ago on the strength of last month's sales.
Separately, MasterCard's SpendingPulse said retail and services sales were up 5.5 percent for the Nov. 5-Dec. 24 period. That compares with a 4.1 percent increase last year. This year's advance was led by a surge in spending on clothing and jewelry.
Less-optimistic data came Tuesday from the Conference Board, which reported that its confidence index, based on a survey of 5,000 consumers, fell from 54.3 in November to 52.5 this month. In addition, a housing report found that home values fell more than had been projected.
"We should watch what consumers do and not what they say," said Omair Sharif, an economist at RBS Securities in Stamford, Conn. "If you looked at the confidence data, you wouldn't have looked for the pace of spending to accelerate as much as it has."
"Reports from retailers as well as data on spending have been upbeat. We would give those more weight," agreed Dean Maki, chief U.S. economist at Barclays Capital in New York.
Federal Reserve policymakers said this month that "depressed" housing and high unemployment remained constraints on consumer spending, reaffirming the Fed's plans to expand record monetary stimulus.