Retail Sales and Industrial Production Surge To New All Time Highs In December
U.S. tallies more record-breaking holiday shopping seasons in a row than you can count on one hand with yet another bigger-than-expect, biggest-ever door-buster.
2017 closed yet another strong chapter in the U.S. recovery from the great recession with a bigger holiday shopping season than expected and, officially, the biggest in history. No surprise to those who attended Brownfields 2017 and heard BL CEO, Dan French’s remarks in the opening plenary sessions, the National Retail Federation reported this week that holiday sales during November and December increased 5.5% over the same period in 2016 to $691.9 billion—again tracking well above GDP growth. Online and other non-store sales, which were up 11.5% over the year before, to $138.4 billion total.
The results exceeded NRF’s forecast of between $678.75 billion and $682 billion, which would have been an increase of between 3.6 and 4%, and marked the largest increase since the 5.2% year-over-year gain seen in 2010 when the Great Recession ended and the Great Recovery began in earnest. “December alone was up 0.4% seasonally adjusted from November and up 4.6 % unadjusted year-over-year,” reported the NRF.
“We knew going in that retailers were going to have a good holiday season but the results are even better than anything we could have hoped for, especially given the misleading headlines of the past year,” NRF President and CEO Matthew Shay said. “Whether they shopped in-store, online or on their phones, consumers were in the mood to spend, and retailers were there to offer them good value for their money. With this as a starting point and tax cuts putting more money into consumers’ pockets, we are confident that retailers will have a very good year ahead.”
“Retail has proven once again that it is the most nimble industry in the economy, able to transform and reinvent itself to meet always-changing consumer demands,” Shay said. “Retail today doesn’t look like retail 10 years ago and it certainly won’t look the same in another 10 years. But retail is retail, and will always be here to serve its customers.”
A note released by the NRF highlights that:
At the same time U.S. industrial production surged 0.9% month-over-month in December and pushed the overall level of output above its November 2014 peak to a new all time record high. The December industrial production surprise was almost double the 0.5% rise expected by industry analysts. Utilities led all categories with 5.6% growth.
Industrial production grew rose at an annual rate of 8.2% in the fourth quarter of 2017, the biggest gain since the second quarter of 2010. For all of 2017, industrial output rose 1.8%, the first and largest increase since 2014. Manufacturing production increased by 7% in the fourth quarter in the biggest gain since the second quarter of 2010 and increased 1.3% in 2017 overall in the largest rise since 2012.
The Great Recovery is gearing back up to levels of activity not seen since the U.S.’s subtle, but substantial pivot early in the cycle. This late cycle burst is fueled by the new tax bill, but there were already numerous structural forces acting to reorient capital investment into the U.S. While there are signs of mature and overstretched markets, i.e. average industrial real estate prices doubled in 2017, much of the growth currently manifesting is extraordinarily healthy.
Indeed, with so much deferred maintenance and pent-up demand for high-need infrastructure projects, there still remains a generation of work to optimize our built-environment to the point where it’s not costing us hundreds of billions in wasted time, spent fuel and deadly accidents. And those improvement projects will be healthy, rewarding investments whenever they might come. There is seemingly strong, bipartisan consensus to reinvest in America again, like the Greatest Generation did before, but we’re waiting to see if 2018 will become the year of the big infrastructure catch up America needs and seizes this moment of historic growth and structural evolution in the economy.