Economy Watch: Retail Sales Better Than Expected in December; Home Prices Up; PPI Slips

By Dees Stribling, Contributing Editor

The Census Bureau reported on Tuesday that U.S. retail sales were up 0.5 percent from November to December (important note: the figures are adjusted for seasonal variation, but not price changes). Year-over-year, the retail sales increase in December was 4.7 percent. In other words, consumers collectively said, What, Me Worry? about the fiscal cliff.

Take autos out of the equation, and the increase for the month was 0.3 percent. Take gasoline out of the equation, and the annual increase for retail sales was 5.1 percent. However one slices it, the new numbers suggest that early, relatively glum assessments of retail sales for the holidays missed the mark.

Most categories of retailers enjoyed some kind of bounce during December. Car sales were up 1.8 percent, and shoppers were out buying enough clothes to support a 1 percent monthly increase. Restaurants and bars also enjoyed a 1 percent monthly uptick in sales. By contrast, electronics retailers lost ground, with a 0.6 percent monthly drop in sales, perhaps indicating that there are only so many iPhone 5s people are willing to buy.

Home Prices Continue Upward

CoreLogic said on Tuesday that the home prices nationwide, including distressed sales, increased 7.4 percent in November 2012 compared to November 2011. That’s the largest annual increase since the bad-old days of the bubble in May 2006, and the ninth consecutive increase in home prices nationally on a year-over-year basis. On a month-over-month basis, including distressed sales, home prices increased by 0.3 percent in November.

Excluding distressed sales — both REOs and short sales — home prices nationwide were up a little less, but still a healthy 6.7 percent on an annual basis in November 2012. On a monthly basis excluding distressed sales, home prices increased 0.9 percent in November.

CoreLogic added that all but six states are experiencing year-over-year price gains, and that its pending home sales index predicts that prices will be up 7.9 percent in December 2012 compared with a year earlier. “As we close out 2012, the pending index suggests prices will remain strong,” Mark Fleming, chief economist for CoreLogic, said in a statement. “Given the recently released QM rules issued by the CFPB are not expected to significantly restrict credit availability relative to today, the gains made in 2012 will likely be sustained into 2013.”

PPI Slips 

Wholesale prices dipped again in December for the third consecutive month, with the producer price index for finished goods down 0.2 percent compared with November, according to the Bureau of Labor Statistics on Tuesday. Excluding volatile food and energy prices and the PPI eked out a 0.1 percent gain in December. For the year, the PPI rose at an annualized rate of 1.3 percent last month. It seems to be a hard time to be an inflation hawk.

Wall Street ended the day mixed on Tuesday. The Dow Jones Industrial Average was up 27.57 points, or 0.2 percent, while the S&P 500 gained 0.11 percent. The Nasdaq lost 0.22 percent, as Apple was in a particularly bearish mood.