Holiday Shopping Gets Early Start

November 19th, 2021

A strong consumer spending report and optimism for the holiday shopping season helped markets shake off last week’s jitters over rising prices. Contrary to economists’ consensus that inflationary pressures would hurt spending, consumers are instead leaning into it with October retail sales up 1.70%. Results from frontline companies corroborate the report with strong Q3 2021 earnings having been announced by Walmart, T.J. Maxx, and Bath & Body Works. Unfortunately, the strong retail activity didn’t extend to the homebuilding segment where housing starts slipped in October. Wall Street was in the holiday shopping spirit, however, lifting the S&P 500 to an all-time high on Thursday and ending the week with a 0.32% gain.  


Consumers Gobble Up the Goods

Consumers got an early start on their holiday shopping lists in October. Retail sales were up 1.70% as shoppers were undeterred by inflation rising at its fastest pace in 30 years. October’s retail sales results come on the heels of September’s 0.80% rise. The gains were broad-based with online shopping leading the way, rising 4.00%. The quick start to the holiday season was fueled by shoppers placing their orders early, hoping to avoid delays stemming from supply chain disruptions. Shoppers also appeared willing to put down their laptops and venture out to brick and mortar stores, sending miscellaneous store sales up 2.80%. With people out and about, gas stations did brisk business with sales up 3.90%. The numbers are encouraging for the holiday shopping season following a recent slide in consumer confidence due to rising prices. The back-to-back rise in sales suggests consumers may not like inflation, but they are not about to let it be the Grinch who stole Christmas.


Housing Starts Slip

It’s a tough time to be a homebuilder as strong demand clashes with rising costs for raw materials, land, labor, and supply chain challenges. Housing starts fell -0.70% to a seasonally adjusted annual rate of 1.520 million units in October. That’s down from September’s 1.530 million units. Weather also wreaked havoc on homebuilding during the month. Hurricane Ida struck in late August causing flooding, which dampened homebuilding activity in the Northeast and the densely populated South in September. With housing starts down from their March peak of 1.725 million, the backlog of houses authorized for construction continues to grow. The bright side – if there is one – is that with homebuilding slowing in the Northeast and Midwest during the winter months, this could help ease materials prices in the warmer regions where building can continue nearly year-round.
Consumer spending, which comprises two-thirds of U.S. GDP, suggests a joyful Q4 GDP is on the way. The Atlanta Fed’s GDPNow forecast is calling for Q4 2021 GDP growth of 8.20%. That would be a strong rebound from Q3’S GDP of 2.00% rate, which was hampered by the Delta variant. There doesn’t seem to be much to get in the way of the economy presently. Consumers have for the most part dismissed inflationary worries, more concerned with getting everything on their gift lists than avoiding higher prices. With wages up strongly year-over-year, consumers are committed to making sure their stockings are full.  With the colder weather and people being in closer proximity, Covid remains a flash point. We are already seeing Europe battle a brutal winter wave, but the FDA delivered an early holiday gift to consumers on Friday. The agency authorized boosters for all adults and with the approval of new therapeutics, Christmas is certainly setting up to be a happier and healthier holiday than last. 

The Week Ahead

It’s hard to believe Thanksgiving is here. Week in Review will be taking a break to grab a turkey leg, watch some football, and do a little holiday shopping. We’ll be back on December 3rd with the latest numbers on jobs, manufacturing, and services.


Wobble to Gobble

Some people are afraid of spiders, some people are afraid of heights, and some people are afraid of marrying into a family that runs 5ks on holidays. The annual Thanksgiving day run, known as the turkey trot, has become a holiday tradition for many families. Running USA reported that more than one million people take part in over 1,000 turkey day races across the country, making Thanksgiving the most popular running day of the year. 
The tradition started in 1896 in Buffalo, New York. The local YMCA hosted a five mile cross-country race on Thanksgiving morning, drawing just six participants—and only four of them made it to the finish line. One runner excused himself after two miles, while another dropped out when his “late breakfast refused to keep in its proper place.” The winner crossed the line in 31 minutes and 12 seconds, averaging a six-minute-per-mile pace which is very, very fast, even for today’s elite runners, not to mention this was 125 years ago and before there were Nikes and activewear. The Buffalo Turkey Trot is the oldest continuously run footrace in North America. It is older than the Boston Marathon which kicked off in 1897, and older than San Francisco’s Bay to Breakers which began in 1912. 
Over the years, race organizers and runners have put their own spin on the trot, making it more about fun and family than about competition. Runners have begun donning turkey costumes and dressing up in all sorts of fun and silly outfits. Courses welcome strollers, wheelchairs, and leashed dogs. The races often include the standard five-miler along with a shorter fun run or walk, and most of them include a charitable component. 
At the Saucony Turkey Toss in Pennsylvania, the athletes who can throw a frozen bird the farthest and finish a fast 5K win a pair of running shoes. Some races award prizes to participants with the best costumes. Participants at the Dallas YMCA Turkey Trot are rewarded with post-race festivities that include food trucks and a beer garden. At the 111-year-old Run for the Diamonds Turkey Trot in Berwick, Pennsylvania, top finishers of their 9-mile race can win diamond jewelry. Participants of the Feaster Five turkey trot in Andover, MA are literally running for pie with each finisher taking home an apple pie. That all seems like great motivation to tie up those laces. Whatever your traditions, all of us at Probity Advisors, Inc. wish you and your families a wonderful, happy, and healthy Thanksgiving, and we hope your holiday season is filled with peace and joy.



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