A strong rebound in retail sales makes third quarter growth expectations realistic.

There is a strong correlation between consumer confidence indices and consumer final demand. The Conference Board’s confidence index jumped to 101.8 in September. That was an 18% rise from August’s level of 86.3. In the past 25 years, the correlation between confidence and consumer spending has been 58%. The September reading is over 19% below the monthly reading in September 2019. This correlation was confirmed with the release last week of the retail sales data for September. Sales increased by a huge 1.9% for the month after rising by 0.6% in August and 1.1% in July.

 

PROBANK AUSTIN ADVISOR - OCTOBER 19, 2020