Retail Sales Are Back

Appropros of no particular news, take a gander at retail sales excluding autos. The shape of the line there is generally what you want to see coming out of a recession. Not just a “return to growth” after bottoming out, but “catch-up growth” that gets you back to trend. For a long time now, the American economy as a whole has achieved the return to growth but not the catch-up. Retail sales, however, have caught up. And business investment is very strong. When we say there’s slack and underemployment in the economy, what we’re looking at specifically is that construction and auto sales remain depressed.

CORRECTION: Scott Sumner got me to look at the numbers here less impressionistically, and my conclusions here are overstated. We’re still actually almost 10 percent below trend level of ~5 percent annual growth.