News & Events

Economic Advisor: September 21, 2017
September 21, 2017


 

Retail sales took a large, hurricane-related hit, while consumer prices expanded, and jobless claims data also continued to be skewed by weather.

Retail Sales

Hurricane Harvey is already having its impact on the economy, as retail sales for August dropped 0.2 percent to $474.8 billion, the Census Bureau reported last week. This was the biggest decline in six months, and many experts attributed the drop to Harvey.

“The early returns from Harvey are trickling in and the news is not good,” Naroff Economic Advisors’ Chief Economist Joel Naroff told the Reuters news service. “Economists are likely marking down third-quarter growth and marking up the fourth quarter.”

The Bureau said that it could not isolate Harvey’s specific impact on retail sales, but it was told from reporting companies that the disaster had “both positive and negative effects on their sales data while others indicated they were not impacted at all,” according to Reuters.

Sectors that saw big swings included gas stations, which increased by 2.5 percent; motor vehicle and parts dealers, which dropped by 1.6 percent; clothing stores, which fell 1 percent; non-store retailers (such as online stores and kiosks), which fell 1.1 percent; and miscellaneous retailers, which grew 1.4 percent.

Consumer Prices

In related news, the Consumer Price Index for All Urban Consumers (CPI-U) grew 0.4 percent in August, according to last week’s report from the Bureau of Labor Statistics. Since August 2016, the index has risen 1.9 percent.

Gas and shelter prices accounted for most of the growth. The energy index grew 2.8 percent during August, with the gasoline index shooting up 6.3 percent. The shelter index increased 0.5 percent for the month, with the rent index growing 0.4 percent. The food index only showed a slight uptick.

The index for all items less food and energy — referred to as “core inflation,” because it removes the most volatile categories — increased 0.2 percent during August.

Initial Jobless Claims

The impacts of Hurricanes Harvey and Irma were felt on the jobless claims front, as well. First-time claims for unemployment benefits filed by the newly unemployed during the week ending September 9, dropped to 284,000, a loss of 14,000 claims from the prior week’s total of 298,000, according to last week’s report from the Employment and Training Administration.

This large swing comes after the previous week’s claims were skewed widely upward by Hurricane Harvey. In terms of the latest report, the Administration stated without equivocation that both Harvey and Irma had impacted the numbers.

Case in point: the four-week moving average — considered a more stable measure of jobless claims — ballooned to 263,250, an increase of 13,000 claims from the preceding week’s average of 250,250 claims.

In any case, this marked the 132nd straight week that initial claims have come in below the 300,000-claim level, which economists consider an indicator of a growing job market.

This week, we can expect:

  • Tuesday — Housing starts and building permits for August, as well as import prices for August, from the Census Bureau.
  • Wednesday — Existing home sales for August from the National Association of Realtors.
  • Thursday — Initial jobless claims for last week from the Employment and Training Administration; leading economic indicators for August from The Conference Board.

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