The odds the US is currently in recession took a hit today based on the Advance Retail Sales report.
Advance estimates of U.S. retail and food services sales for June 2019, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $519.9 billion, an increase of 0.4 percent from the previous month, and 3.4 percent above June 2018.
- Total sales for the April 2019 through June 2019 period were up 3.4 percent from the same period a year ago.
- The April 2019 to May 2019 percent change was revised from up 0.5 percent to up 0.4 percent.
- Retail trade sales were up 0.4 percent from May 2019, and 3.3 percent above last year.
- Nonstore retailers were up 13.4 percent from June 2018, while health and personal care stores were up 5.5 percent from last year.
- Isolated weakness: Electronics fell 0.3%, gas stations fell 3.8%, and department stores fell 1.1%.
Econoday ponders the strength in auto sales as do I.
Strength abounds in this report with the isolated weak points led by gasoline stations, where price effects tied to lower oil prices pulled down sales by 2.8 percent, and also department stores, an ailing segment of the retail sector that seems to be devolving.
The most surprising strength in the report, at least for forecasters, is a 0.7 percent jump in auto sales that conflicts with what was a flat month for unit sales (a series, however, that is clouded with special factors). Not surprising is a another surge, this time 1.7 percent for a second month in a row, for nonretailers which continue to feed off of traditional retailers such as department stores.
A key strength, and one that underscores discretionary power, is yet another strong gain for restaurants, up 0.9 percent following prior gains of 1.0 percent, 0.7 percent, and 0.8 percent. This shows that consumers, flush with confidence and fully employed, are enjoying themselves.
The list of strength goes on with both furniture and building materials snapping back with 0.5 percent gains that point to strength for residential investment. Clothing stores saw sales also rise 0.5 percent as did health & personal care stores.
The Federal Reserve may be looking across the oceans for reasons to justify a rate cut, but any justifications aren’t coming from the US consumer which makes up the vast bulk of GDP. And however much inflation may be flat, consumer spending is not to blame.
These are not “recession now” numbers even if one views the auto numbers with complete skepticism.
Opinions Vary
Trucking Disagrees as Well
- Recession Looms: Cass Freight Index Negative for 7th Month
- Trucking Bloodbath: 2,500 Truck Drivers Lose Jobs
Regardless, a rate cut on July 31 is still baked in the cake.
Mike “Mish” Shedlock
Unadj y o y no bueno too! Buy moar!
I still say we are headed for just lower growth and not a recession. The Fed cutting will stave off a decline in the economy. We averaged about 3+% over the last 2+ years but we will head back to below 2 this year. The Fed is merely trying to stave off a recession and huge decline in tax receipts so the debt and deficit don’t become unmanageable on the bond markets. As long as the Fed can manipulate the economy without a huge recession, all will be well elsewhere. Anything like a large bond fund blowout could cause contagion that spills over to the real economy.
we are like frogs, not minding getting boiled as long as it happens gradually…
We won’t get boiled. The problem the world has is the dollar is the defacto global reserve currency and there are too many of them being held by foreign governments for them to become of lesser value. If a country like Japan can go 30 years with little growth and debt to GDP ratio of ~200%, certainly the US can stand up for much longer at 1-2% GDP. The world can’t afford for the United States to fail.
America won’t “fail”, as in rolling over and disappearing. Rome is still standing there. Just a bit decayed. Like American freeways, and other institutions.
“The world” is simply bypassing America. Americans are by now too burdened with producing unearned rent for deadweight leeches, to be able to provide the rest of the world with anything of value at a competitive price. So they are simply no longer of much use to anyone.
I didn’t say anything about Americans. Just America. They are two completely different things.
That’s what they’re betting on.
“It’s out currency, but your problem” -R.M. Nixon. We do the printing, they get the inflation. Or at least that’s always worked. Until it doesn’t. China can’t dump the dollars into the Middle East quickly enough, and is making noises like they are getting tired of having to convert everyone else’s currency to dollars to buy oil.
The troubling problem is that the dollar is being used as the weapon of choice by this administration. How many countries are under sanctions? Countries that are no longer able to contribute to the global economy because they’re not permitted by Team America© to conduct business in the reserve currency.
I guess I cannot edit the comment, so I’ll just add that John Connally Jr. said that, not Nixon.
Curious as to the huge decline in tax receipts. Does anyone have any details, I’ve heard the tax cuts drove them down but FRED and quarterly showing them ~flat: https://fred.stlouisfed.org/series/W006RC1Q027SBEA
“The odds the US is currently in recession took a hit today based on the Advance Retail Sales report”
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Am I the only one hoo bothers with revisions?
With this report Total Adjusted Retail Sales revisions for
March $514,695 billion —–> $513,608 billion
April $516,194 billion —-> $515,545 billion
May $519,020 billion —> $517,682 billion
NEGATIVE revisions MORE THAN offset June’s gain (which will face its own revision soon enough).
Tony Tony Tony..this is all about expectations management.
Another solid month of (soaring prices)retail sales,driven by almost daily price increases on everything which begs to ask…………..economy now in the outer bands of hyperinflation?
hyperinflation ? You cannot be serious.