The consumer has all but thrown in the towel as retail sales unexpectedly declined for the second month.
The Econoday consensus was for a weak bounce to +0.1% but sales came in at -0.2%.
Revisions did take May from -0.3% to -0.1% so sales were essentially flat for the last two months.
Consumer spending in second-quarter GDP will not be getting a lift from the retail component as retail sales fell an unexpected 0.2 percent in June. This follows a revised 0.1 percent decline in May and a revised 0.3 percent gain for April which proved to be the quarter’s only respectable showing.
Readings show wide weakness with vehicle sales coming in with a marginal 0.1 percent increase, the same for furniture and also electronics & appliances. Declines include food & beverage stores, down a sharp 0.4 percent, and department stores down 0.7 percent following the prior month’s 0.8 percent plunge. Restaurants are also weak, down 0.6 percent for the third decline in four months. Gasoline sales fell 1.3 percent reflecting price weakness. Nonstore retailers, which include e-commerce, are a positive in the report with a 0.4 percent gain as are building materials rising 0.5 percent gain.
But there really aren’t very many positives in today’s report, one that points to a surprising lack of consumer spirit and one that will not be raising estimates for second-quarter GDP.
Advance Retail Sales
Supposedly auto sales were up 0.1% in June, 0.9% in May, and 0.5% in April. This is either one hell of a seasonal adjustment or massive channel stuffing by manufacturers to dealers. I suspect both, but especially channel stuffing.
- On May 2 (April Numbers) I reported Auto Sales Puke Again: Year-Over-Year Totals: GM -6%, Ford -7.2%, Toyota -4.4%, Fiat-Chrysler -7.0%.
- On June 1 (May Numbers) I reported Motor Vehicle Sales Flat, Hope Turns to Second Half: What About Fleet Sales? Incentives?
- On July 3 (June Numbers) I reported Auto Sales Weak Again, Average Loan Hits Record 5.75 Years: Don’t Worry “Plateau Expected”.
Mike “Mish” Shedlock
“Unexpectedly”….to the perpetual cheerleaders in the economic media, every downward movement is unexpected.
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Mish, no doubt you will be commenting shortly on the extraordinary figures for industrial production. A quick, back of the envelope calculation, makes it hard to square retail sales with imports/exports, inventory and industrial production. Since December 2016 industrial production rose 1.3% but factoring in real net exports, real retail sale growth which ais non existent and Nowcast’s estimation of inventory growth, the figures do not reconcile. There is no scope for the growth in industrial production announced over the last 6 months. Perhaps you can reconcile these figures.
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The Fed is DONE tightening for this cycle.
IMHO, the next move will be a rate cut.
Interestingly, that would put the “peak” Fed Funds target for this cycle at the current 1.00-1.25%.
Curiously, this is exactly where the “trough” was (2003-2004) two cycles ago.
Everything in finance has been turned on its head in less than 15 years.
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From a Woman’s Prospective
RETAIL
Clothing
That’s right we are not buying what they’re selling because there is nothing new and fabulous that we women must have hanging in our closets
It seems as though they (the designers) are having a dry spell with creativity
RESTAURANTS
In my area the restaurants have committed suicide with their “tabs” by jacking up the prices of booze and other intoxicating delights
Which as Americans we do love a good cocktail or 2 before dinner even if the happiness only last for an hour
No matter your wallet size
No one is willing to pay $14.50 for 1 bottle of beer
…but of course all is not lost
I must do my part as a Female Patriot to help the economy to move in a positive direction
So I recently bought 7 pairs of boots
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Yes, but you forgot to mention the $13 “gourmet” hamburgers and the $8.99 omelettes that contain three eggs that cost 10 cents each.
And then you are expected to “tip” 15%-20% on top of that.
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“So I recently bought 7 pairs of boots”
Perfect. Thanks for the laugh, and your link into the animals video. The latter made my day.
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…glad I could brighten your day 👸
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Average ticket is what businesses care about … not just traffic.
Full restaurants and packed parking lots only tell part of the story. And anyone using that info as basis for whole story does not what they are talking about.
In the good old days my wife and I would each get an entree and split an appetizer … with each of us getting 1 to 2 drinks.
Now?
2 entrees, no app and usually just water. But we’re taking up a table. Our car is in the parking lot. The restaurant is doing great, right?
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I’m in the manufacturing segment. Producing capital goods for businesses.
It is as busy as before the great recession. We are turning away work.
Maybe business investment will help the economy and replace some of the consumer purchases.
In the longer term, this would be better for the county’s economic health.
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Hey Mathew. If businesses are expanding and buying more capital goods, yet consumers are re-trenching and spending less, then businesses must export more to justify their investments. So it’s important that the US govt do all they can to promote more trade. If Trump wants more growth he needs to be promoting trade, rather than trying to start trade wars.
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“Revisions did take May from -0.3% to -0.1% so sales were essentially flat for the last two months.”
…
True, but negative revision to April negated May’s bump.
Adjusted total retail sales April
Last month (1st revision) … $475.009 billion
This month (2nd revision) … $474.547 billion
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Reblogged this on World4Justice : NOW! Lobby Forum..
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