The Keynesian economists and the monetarists at the Fed are singing a happy tune today as retail sales bounced 0.6 percent vs the Econoday consensus estimate of 0.3%.
The consumer was back in the stores last month in a July retail sales report, headlined by a 0.6 percent monthly gain, that not only exceeds top expectations but also includes sizable upward revisions. Nonstore retailers, vehicle dealers, building materials stores lead the report — all major categories. Secondary readings are all strong: up 0.5 percent ex-autos, up 0.5 percent ex-autos ex-gas, and up 0.6 percent for the control group.
Revisions are prominent in this report with June revised 5 tenths overall to plus 0.3 percent from an initial minus 0.2 percent. And May gets an upward revision too, now unchanged vs minus 0.1 percent.
One the weakest of all the consumer readings, retail sales are now back into the fold with other indications on consumer spending, which are positive and in line with full employment. Note that the upward revisions to June and May will be positives for second-quarter GDP revisions.
Across the Board Spending Increases
Every category increased except electronics and appliance stores, down 0.5%, and gasoline stations, down 0.4%. General merchandise stores rose 0.1%.
Supposedly, motor vehicle sales were 1.2% in July following a 0.9% gain in June. This is unbelievably bizarre in the face of actual auto sales reports.
The revisions help explain 2nd quarter GDP numbers, but now economists will likely revise the second quarter up.
Mike “Mish” Shedlock