The U.S. consumer steps into the spotlight in the coming week, with retail sales and a string of earnings set to document how much shoppers spent over the past three months.
It's difficult to read how it could play out. Consumers have been overwhelmingly confident in recent months, with sentiment even hitting its highest level in 13 years in mid-October. However, they've also been perplexingly unwilling to loosen the purse strings.
"Perhaps one of the most important developments for the consumer this year has been the strong increase in consumer confidence since the presidential election," Wells Fargo analysts wrote in a note. "However, such confidence has not translated into stronger growth in consumer spending."
Weak growth in real disposable income is one factor contributing to weaker consumption. Any increase in real personal consumption expenditure has been financed by a drop in the savings rate, Wells Fargo notes.
Analysts expect another month of weak retail sales in October when the U.S. Census Bureau releases its report on Wednesday, Nov. 15. The headline number is expected to come in flat, month-on-month, according to FactSet estimates. Excluding auto sales, sales are expected to rise 0.2%.
Retail sales over the third quarter were a mix of stops and starts. Total retail sales rebounded 1.6% in September after a 0.1% decline in August and a 0.5% increase in July. Excluding auto sales, retail sales rose an average 0.7% in the third quarter, in large part because of the bounce in September.
Retail and department store earnings should also give insight into consumer behavior. So far this season, earnings have been a mixed bag -- Nordstrom Inc. (JWN - Get Report) and J.C. Penney Corp. (JCP - Get Report) posted better-than-expected quarters, Kohl's Corp. (KSS - Get Report) beat on revenue but missed on earnings, and Macy's Inc. (M - Get Report) beat on earnings but missed on revenue.
Wal-Mart Stores Inc. (WMT - Get Report) , the largest retailer in the world, is scheduled to report on Thursday, Nov. 16. The Bentonville, Ark.-based company is expected to post third-quarter earnings of 97 cents a share, down a penny from a year earlier, according to FactSet estimates. Same-store sales are forecast to rise by 1.8% in the October-ended quarter, a slight uptick from the previous three-month period. Analysts target 2.4% growth in overall revenue.
Other retailers reporting earnings this week include Advance Auto Parts Inc. (AAP - Get Report) , Dick's Sporting Goods Inc. (DKS - Get Report) , Home Depot Inc. (HD - Get Report) , and TJX Companies Inc. (TJX - Get Report) on Tuesday, Nov. 14; L Brands Inc. (LB - Get Report) , Staples Inc. (SPLS) , Target Corp. (TGT - Get Report) , and Williams-Sonoma Inc. (WSM - Get Report) on Wednesday; Best Buy Co. Inc. (BBY - Get Report) , Gap Inc. (GPS - Get Report) , J.M. Smucker Co. (SJM - Get Report) , Ross Stores Inc. (ROST - Get Report) , and Shoe Carnival Inc. (SCVL - Get Report) on Thursday; and Abercrombie & Fitch Co. (ANF - Get Report) , Buckle Inc. (BKE - Get Report) , and Foot Locker Inc. (FL - Get Report) on Friday, Nov. 17.
Earnings outside the retail sector include Juniper Pharmaceuticals Inc. (JNP) on Monday, Nov. 13; JinkoSolar Holding Co. Ltd. (JKS - Get Report) on Tuesday; Progressive Corp. (PGR - Get Report) on Wednesday; and Helmerich & Payne Inc. (HP - Get Report) , Splunk Inc. (SPLK - Get Report) and Viacom Inc. (VIAB - Get Report) on Thursday.
The GOP's tax proposals may make some progress in the coming week. The House Ways and Means Committee is pushing for a floor vote on its Tax Cut and Jobs Act bill, but there has been debate among investors over whether the bill can pass the House and Senate after the Senate Finance Committee released details on its own tax proposal last week.
Also on the economic calendar in the coming week, producer prices for October will be released on Tuesday; consumer prices for October, the Empire State Manufacturing Survey for November, and business inventories for September on Wednesday; the Philadelphia Fed Business Outlook Survey for November, import and export prices, industrial production, and the housing market index for November on Thursday; and housing starts for October on Friday.
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