Bloomberg Surveillance: US Retail Sales Dip; Government Shutdown Threat Eases

Michelle Meyer, Mastercard Economics Institute North America Chief Economist, says October's slight drop in US retail sales doesn't take away from overall robust consumer spending . Diane Swonk, KPMG Chief Economist, details how the Fed will look to navigate a potential successful soft landing . Anastasia Amoroso, iCapital Chief Investment Strategist, says corporations could look to cut costs in 2024 if the Fed doesn't cut rates . Henrietta Treyz, Veda Partners Economic Policy Director, discusses an increasingly dysfunctional environment on Capitol Hill despite the passage of a stopgap funding bill . Jennifer Bartashus, Bloomberg Intelligence Senior Analyst, breaks down Target's better-than-expected 3Q earnings . Get the Bloomberg Surveillance newsletter, delivered every weekday. Sign up now: https://www.bloomberg.com/account/newsletters/surveillance Full transcript: This is the Bloomberg Surveillance Podcast. I'm Tom Keene, along with Jonathan Farrow and Lisa Abramowitz. Join us each day for insight from the best and economics, geopolitics, finance and investment. Subscribe to Bloomberg Surveillance on demand on Apple, Spotify and anywhere you get your podcasts, and always on Bloomberg dot Com, the Bloomberg Terminal, and the Bloomberg Business app. This is a joy what happens with young economists as you read their research and you go, oh, they're quite competent. Not long ago and far away, but a few years ago. That was Michelle Meyer absolutely owning the parsing of the American consumer. She worked for a small bank in Manhattan and is now Chief Economists North America from MasterCard Economics. You own the analysis I put you and Allen Zetner together. You own the analysis of the American consumer. Have we stopped spending? We clearly have not stop spending. Far from it, and think about the data this morning. It was an incredible combination of continued strength and retail spend, of rebound in Empire State manufacturing, which shows that there's still a need for more goods production, which is because consumers are still spending, and on top of that, you're getting some relief on the pricing side. So it's a really nice combination. I hate asking this question, and I'm stunned. It's my first time I've asked it. On November fifteenth, what's back to what's a holiday season look like? What's Black Friday? And then Black Monday and this and that? What does this retail madness did January look like? Well, it is a longer holiday season. We've learned that over the last few years, and it's a heavily promotional based holiday season, and part of that is because of the fact that there's so much demand out there to buy online. I mean, think about the numbers we just saw this morning. Our spending post numbers saw just over eight percent year of your growth in e commerce sales. So you know, you're seeing a consumer that is certainly exploring many different channels of spending, including online, and that creates a lot more opportunities for them to get products, and it also creates a lot more need for retailers to compete with these big moments in time where they offer promotions, and I think that's what's going to be indicative. So we'll learn a lot from the Black Friday period, and it's approaching very quickly. How sustainable is this combination of both robust retail sales and disinflation or even outright goods deflation. So I think you have to consider the different categories. I mean, when you looked at CPI yesterday, you certainly saw some categories like these big durable goods like your refrigerators back seeing some price declines. But for many other things, like many services, for example, you are still seeing some price increases. So part of the drop in prices for some of these goods simply reflects the fact that prices increased too much out of a pandemic because of supply chain issues, because of higher costs, and now it's reverting a bit more to something more normal, right, So that means in real terms you will see some support in terms of some of these items moving through. In nominal terms, you could see some move down in terms of overall spend. So it really depends on why inflation is moving, and that is a function of the type of product and how things evolved coming out of the pandemic. When you put it together, does this seem like a recipe for this goldilocks soft landing, or does this seem to paint the picture of a federal reserve that needs to do more and of an economy that has way too much momentum to really achieve the disinflation that a lot of people are baking into market evaluations. I think the data is shaping up in a way that's really favorable at the moment because you continue to have economic growth. Look at the third quarter GDP numbers, that was fairly broad based economic activity, not just consumers but also businesses investing inventories getting much more manageable and in stock So you know, things have been evolving remarkably well in terms of the real economy, taking out