Recession Watch 2017

Recession WatchOur Recession Watch Dashboard is showing an overall low risk of recession starting within the next year.

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Third Quarter 2016 Earnings Preview: Growth Returns?

LPL Market ResearchWe believe the earnings recession may have ended in the third quarter of 2016. As the drags from sharp energy declines and a strong U.S. dollar continue to abate, backed by a pickup in economic growth, the S&P 500 could potentially produce a small increase in earnings on a year-over-year basis in the just-completed third quarter. This week we preview the third quarter earnings season and discuss…

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What Happened to the Consumer?

Posted by LPL Research

Last week saw some huge drops from many large department stores thanks to disappointing earnings. Then on Friday, April retail sales came in at 1.3%, well above the consensus estimate. In fact, this was the best monthly gain since March 2015. So, which is it? Is the consumer dead or is there something else we are missing?

We asked LPL Research Chief Economic Strategist John Canally his take on all of this, and here is what he had to say:

“Last week’s tepid news from mall-based retailers stood in sharp contrast to the 10% year-over-year gain in non-store retailers (online spending) reported in the U.S. government’s April retail sales report.”

In other words, online spending is soaring, while traditional department spending is stagnant. Here are a few stats to put all of this in better perspective.

  • Total retail sales for department stores last month was $13.3B. Non-store retailers (online) had sales of $45.2B.
  • Compared to department stores ($13.3B), gas stations saw sales of $32.6B last month, grocery stores had sales of $52.2B, and restaurants/bars came in at $54.1B. People are spending, just not at department stores.
  • Incredibly, total monthly retail sales at department stores in January 1992 were $14.1B. Compared to the $13.3B for April, that’s a long time with no growth to show for it.
  • Department stores and non-store retailers (online) sales were both $17.8B in November 2003. Since that time, non-store sales have surged +153%, while department stores have dropped 25%.

Lastly, according to recent data from the U.S. Census Bureau, e-commerce made up 7.5% of all retail sales during the fourth quarter last year. Incredibly, since this data started in late 1999, e-commerce as a percentage of retail sales hasn’t dropped for 64 straight quarters. It was 0.9% in the fourth quarter of 1999 and was up to 7.5% at the end of last year.

The U.S. consumer isn’t dead, spending habits have simply changed. For more on what we are seeing from the consumer now, be sure to read John Canally’s recent Weekly Economic Commentary, Consumer Check-In.

IMPORTANT DISCLOSURES The economic forecasts set forth in the presentation may not develop as predicted.

The opinions voiced in this material are for general information only and are not intended to provide or be construed as providing specific investment advice or recommendations for any individual security.

This research material has been prepared by LPL Financial LLC.

To the extent you are receiving investment advice from a separately registered independent investment advisor, please note that LPL Financial LLC is not an affiliate of and makes no representation with respect to such entity.

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A Tale of Two Earnings Seasons

LPL Market Research The fourth quarter of 2014 will be a tale of two earnings seasons: the best of times and the worst of times. Despite a substantial drag from the energy sector, we expect another good earnings season overall. We expect more …

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Will Shoppers Bring Holiday Cheer for Markets?

ShoppingWe think the holiday shopping season may bring some holiday cheer for the markets this year. The U.S. consumer is in good shape, the season got off to a strong start, and …

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Solid Earnings Season Spelled Out

weekly-marketWhile the certainty provided by an election outcome has been positive for the stock market over time, our positive stock market outlook is based much more on fundamentals…

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Is Investor Complacency Finally Ending?

Is Investor Complacency Finally Ending?Last week, U.S. stocks suffered their worst drop since June 1, 2012, measured by a 2.1% loss — totaling 318 points — in the Dow Jones Industrial Average. The week began with a terrorist attack that disrupted the Boston Marathon and a report that China’s economic growth unexpectedly slowed in the first quarter of 2013.

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10 Indicators to Watch for a Spring Slide in the Stock Market

10 Indicators to WatchOne year ago, we provided our list of the 10 indicators to watch that seemed to precede the stock market declines in 2010 and 2011 and accurately warned of another spring slide in 2012.

We again look to these indicators for signs of a potential spring slide in the stock market this year.

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