Consumers went on a spending spree in July except for motor vehicles and parts. Who can afford a car anyway? 
Advance Retail Sales Details
- Advance Retail and Food Services estimates for July 2023, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $696.4 billion, up 0.7 percent (±0.5 percent) from the previous month, and up 3.2 percent (±0.7 percent) above July 2022.
- Total sales for the May 2023 through July 2023 period were up 2.3 percent (±0.4 percent) from the same period a year ago.
- The May 2023 to June 2023 percent change was revised from up 0.2 percent (±0.5 percent)* to up 0.3 percent (±0.2 percent).
- Retail trade sales were up 0.6 percent (±0.5 percent) from June 2023, and up 2.0 percent (±0.5 percent) above last year.
- Nonstore retailers were up 10.3 percent (±1.6 percent) from last year, while food services and drinking places were up 11.9 percent (±2.3 percent) from July 2022.
The key phrase is “adjusted for seasonal variation and holiday and trading-day differences, but not for price changes.” It’s real (inflation-adjusted) sales that factor into GDP. This report, except for autos, was also on the hot side.
Advance Retail Sales Month-Over-Month Real vs Nominal
On a CPI-adjusted basis, advance retail sales have been strong two out of the last three months, rising 0.6 percent, 0.1 percent, and 0.5 percent in May, June, and July respectively.
Compared to a year ago over even two years ago, real sales have stagnated.
Real vs Nominal Advance Retail Sales
Real retail sales peaked in April of 2022 and are down 2.3 percent since then.
Real vs Nominal Retail Sales Percent Change From Year Ago
Adjusted for inflation, advance retail sales are down for the sixth straight month compared to a year ago.
But it is the month-over-month numbers the Fed will be watching. This was a hot report except for autos. But who can afford a car anyway?
The average full-size care was over $48,000 in June according to Clark.Com. Nerd Wallet reports the average monthly car payment is $725 for new cars and $516 for used.
If you are not committing an extra $700 a month, I guess you can splurge elsewhere, until you need a car repair.
UAW Declares War on Corporations, Seeks 46 Percent Wage Hike, September Strike Looms
Meanwhile, please note the UAW Declares War on Corporations, Seeks 46 Percent Wage Hike, September Strike Looms
UAW Demands
- 32-hour workweek
- 46 percent pay raise over 4 years
- Right to strike over plant closures
- Increased retiree benefits
- Defined pension plan for all workers
- Cost of living adjustments
Those demands will never fly, but a militant union is increasingly agitated to strike.
I expect retail sales to tank in the 4th quarter. Student loans start repayment in October. Credit card debit is over 1 Trillion with 30% interest rates. ALL insurance rates are significantly increasing (auto, homeowners, medical). All of these things are going to decrease disposable income.
$1 trillion CC debt works out to about $8k/household. At 30% interest, that’s $2400. or $200/month. And with rising rent, insurance and food, how can spending be holding up? I think the numbers are better adjusted like everything coming from the gov. Wonder how long they can keep this up until people realize there’s not much difference between our leaders and the Chinese.
It’s simple. Banks don’t lend deposits. So, a drop in bank-held savings increases money velocity. Since C-19, there’s been a 18% drop.
How is credit card debt measured?
My question relates to ongoing balances as compared to balances that are paid off each month. For me and a lot people I know, cash just isn’t used. Everything is charged ( not debit cards) but paid when due so the interest rate isn’t a factor.
That’s a good question. I think fred just adds up whatever the banks report. I think about 1/3rd pay off their balance every month and I would assume they owe a lot less than those who don’t. I would guess about 90% is interest paying.
If the synthetic EURUSD futures 1M is a waterfall chart we might say hello to president Nixon #1. Nixon #1 and Nixon #2 will haunt us for a long time.
Indeed, a 6-6.25% (higher?) FED funds rate may be the ‘terminal’ rate. Certainly, terminal for the US Federal government who is flat out broke.
Credit card spending will keep retail spending numbers looking great awhile and also keep inflation higher longer. The FED will remain in QT posture until they of course show their true colors ‘QE’.
30% APR credit card rates are common at many retailers who offer cards now. Criminal indeed. Why not make the rate 40%? Between student loans and credit card debt, retail spending is going to be very strained going forward.
I wouldn’t get to excited about this report.
EURUSD futures 1M. BB #3 : Oct/Nov 1978, 1.135/1.002.
Price breached BB #2 and popped up on falling vol to BB #3 top, in July 2023, leaving behind a large selling tail. In order to move up there must be a close > July high 2023 @ 1.12757 for funfunfun. In order to cont down, there must be a close < July 2023 low.
GDPNow jumped to 5.0%!!! I mean, I’ll take the under but still, no recession anywhere in sight.
Synthetic EURUSD futures 1M : BB #1 : July 1973 high/Jan 1974 low, 0.864/0.677.
BB #2 : Mar high/May low 1978, 0.98/0.917. BB #3 : above BB #2…
If EURUSD is a waterfall chart USD will rise, deflation. If not, Inflation > 10%.
52 years ago today Pres. Nixon “temporarily suspended” the US gold standard. Fiscal sanity was quickly ushered out back and executed. The US National debt that year was $398 billion, and is now ~$32,700 billion. How’s that for inflation?
The Gold Standard, the last legal link to gold (prior to the “gold cover” bill of March 19, 1968), was fictional, the economic tie tenuous, and its protection was a myth.
President Roosevelt and his Treasury Secretary, Morgenthau, exercising the crisis powers delegated to the executive branch by Congress, took the U.S. off the gold standard in April, 1933 by making the dollar inconvertible into gold at a fixed price. And to make matters worse they periodically kept raising the price of gold from $20.67 per ounce to a final price in Dec. 1933 of $35.
This had the effect of depreciating the exchange value of the dollar. All of this was done by a creditor nation operating with a chronic surplus in its balance of payments.
The shift in the composition of the money stock is telling. As Shadowstats puts it:
“The Federal Reserve Overhauled Its Money Supply Reporting, Redefining Traditional M1 from 34.8% to 93.4% of a Not-Redefined Total M2 • This Masked Accelerating Flight-to-Liquidity in Traditional M1 from Non-M1 Components of M2 • ShadowStats Defined “Basic M1″ — Combined Currency and Demand Deposits — Still Reflects the Extraordinary Liquidity Flight to, and Surge in the Narrower Money Supply”
I.e., our “means-of-payment” money supply has increased. Gated deposits have been shifted into transaction deposits. The “cash/drain” factor has also accelerated in the last two months.
Tesla cut model Y prices in China by $2K/$3K. It’s not the first cut. BYD and the rest of the EV sector did the same. The innovation co cannibalized each other. BYD CEO boasted off 19K R&D scientists/engineers, new patents every 10 min. Sales are
rising, expanding globally. In the race to the bottom consumers might wait for lower prices. Deflation. Ilan wants to stay in China, but he is losing his grip.
If the EURUSD 1M “synthetic” is a waterfall chart, it might breach Sept 2022 low, Ilan
might be out of Europe. Turkey might buy TSLA leftovers.
Inflation is massaged to report less than half reality. Therefore the correction for inflation is bogus too. Economic activity is contracting rapidly. USA had a manufacturing monopoly after WWII. Unions extorted wages beyond the value of unskilled labor. The US standard of living inflated. Those days are gone. One billion eager Chinese entered the labor force at $1/hour. Three hundred million well educated USSR entered the labor force at $2/hour. One billion East Indians are just now entering the labor force. Unskilled US labor is not worth $15/hour when 8 billion people live on $2/day. The bottom rung of US standard of living is returning to tar paper shacks and a tent on the sidewalk. Taxpayers cannot afford to support druggies and indigents in the style to which they have become accustomed. I’ll know we have returned to normal when I stop seeing conspicuous consumption of tattoos, double lattes, tattered designer jeans, ubereats burgers, and big hoss pickup truks.
Admit it Mish you don’t really want to end inflation. I’ve posted a way to forever end inflation mathematically and macro-economically here for years and virtually no one here ACTUALLY looks at it. A way that benefits every individual and virtually every commercial agent. A way that blows away all of the “free” market delusive theory and exposes the fact that the reason for the inability to resolve our economic problems is because the monopolistic monetary paradigm is the actual deepest reality that enforces alternately goosed and strangled financial chaos out of which finance always rises from the ashes and 90% of everyone else limps on unknowingly. Chaos is not freedom its the lack of real barriers and the ability of the wielder of a monopoly paradigm to dominate.
You are smart about reading “the market” as much as is possible within the chaos it actually is. Are you honest enough to give up your libertarian beliefs and simply admit that we are in an advanced state of an anomalous monetary and financial paradigm…that can only be resolved with a new paradigm?
Of the pseudo adjusted jump, 30 percent was restaurants.
As Danielle DeMartino Booth keeps pointing out again, and again, and again … As long as Uncle Joe keeps pumping $30 billion a month in questionable tax refunds to the wealthy, with zero strings attached, they are going to spend it on travel, entertainment, villas on Lake Como, whatever.
This is not spending, its just more government debt
The nearly $2T deficit spending this year is singlehandedly keeping us out of a recession. And then add the fact that housing nationally has barely gone down and is now rising means local government’s budgets are still bloated from property tax revenue.
As an aside, can ANYONE imagine how bad things are going to get if the dems keep the WH in 2024? Biden will let 10M illegals into the US during his first 4 years. Another dem would easily let possibly let in another 10M. And that’s just immigration.
Certain Republicans made a big deal about being able to cut spending once they started to negotiate for the FY24 budget. Well, Schumer just said they’re ready to pass a CR. Absolutely zero restraint from either side of the aisle.
And we’re going to spend the next 12 months watching our democracy continue fall into the abyss. When a recession finally arrives, what are all of these illegals going to do for work?
Interest rates higher for a longer. How many more times does the Fed have to say this? How much more data do they need? I would say 1 to 3 more rate hikes. The economy Hass to slow down somehow. China is a huge play into this as well.
Since we’re not talking about the wage price spiral, I will. Besides the UAW, federal workers are due to receive a 5.2% pay increase in January. It’s pretty much written in stone. This week, and I do not have all the details, US Air Force engineers in certain pay bands and specific engineering fields, will receive a 40% raise. This is an a joke folks. The Air Force and military are finding it difficult to hire qualified engineers due to google and other tech industries paying twice as much as federal salaries. This phenomenon occurred in the 90s with US Air Force enlisted who are being trained as computer net work administrators, programmers etc. they offered bonuses of $80-$100,000 to try and keep people in the service because they could make twice as much in the private sector. I do not have the numbers on US Air Force engineers. I do not know if this applies to other services.
At least 13 states will be at a minimum wage of $15 by 2024. I cannot find data on what states will be raising near or to that level in the new year. Really, this is all just another Datapoint.
Joe Howmuchamonth simply cannot wrap his mind around this simple fact. Happens every time.
Yearly numbers look bad because gasoline prices have cratered. Ex-gasoline annual retail sales are up 5.6%, with inflation around 3.2% that’s a real sales increase of 2.4%.
not correct – you have to adjust inflation too.
What is inflation ex gas then?
welcome to FRED
https://fred.stlouisfed.org/series/CPILEGSL
I understand that there is a huge discrepancy between this and what Redbook says about sales.
I trust Redbook more
Ruble
Argentina Peso
Yuan
Lira
This news might sound better if it were not also true that consumer debt is higher than it has ever been (modelling after the federal gov’t?). As for auto sales … if I lived where they’ve said “no new gas cars after 2035 … I’d try to keep my junker going for a few more years and then get a good gas vehicle so 2035 does not look like a hard stop.