One month of data for the third quarter is in. The reports are mixed but the number of negative headlines exceeds the number of positive ones.

Let’s start with more numbers from today before finishing off with what we know so far.

The Census Bureau Report on Advance Economic Indicators shows wholesale inventories rose 0.4% in July.

Retail inventories fell by 0.2% from an unrevised June estimate. The Census Bureau revised wholesale inventories slightly lower from 0.7% to 0.6%.

Wholesale inventories gave a late upward boost to second quarter GDP.

Average this out and you have a 0.1% rise in both wholesale and retail inventories or 0.2% in one and nothing in the other.

This is a slight positive to third quarter GDP, subject to revisions, and further subject to Hurricane Harvey disruptions.

Slow Start to Third Quarter

So far, the third quarter is not off to a great start.

The housing reports were worse than expected, today’s reports on international trade and inventories will not impact GDP much, the durable goods report was mixed despite a miserable headline number, and industrial production was weak.

Retail spending rose sharply in July, assuming one actually believes the August 15 Census Bureau report on retail spending that shows auto sales rose 1.2%. I don’t.

Cracks such as rising credit card delinquencies and more believable report on slowing auto sales have popped up.

Finally, Trump’s increasingly belligerent position on trade is very worrying. For details, please see Trump Rant of the Day: “I want tariffs. Bring me some tariffs!”

Mike “Mish” Shedlock