Earlier this morning, the U.S. Commerce Department issued some disquieting economic news, when it reported that retail sales had fallen by 0.5% in June. That was the third monthly decline in succession for this pivotal series, following more modest reversals of 0.2% each in both April and May.
The latest dose of disturbing news was especially unpalatable, as a gain of modest proportions had been the consensus forecast. In all, retail activity fell off at motor vehicle and parts dealers, at furniture and home furnishing stores, in the electronics and appliance areas, and at building materials, sporting goods, and food and drinking establishments.
On the other hand, nominal increases were tabulated at clothing and apparel stores and at non-store retailers, such as ordering on line. Clearly, this was not the result that the economic bulls had been expecting, and it is one more distressing metric to add to a generally souring forecast for the just-completed second quarter, where we now expect the nation's gross domestic product to have inched ahead by barely 1.5%. Earlier, it had seemed likely that GDP would advance by about 2% in the latest period. Note that the initial estimate of second-quarter GDP will be released later this month.
Taken on a year-to-year basis, we find that retail sales were up 3.8% from June of a year ago, while sales from April-though-June were ahead 4.7% from a year earlier. The likely listless second-quarter showing by the economy, however, should be followed by a somewhat better performance in the third quarter, where we now see GDP growth stepping back up to 2%, or more, with the prospective showing helped by lower energy prices and a better performance from the housing market, which, somewhat ironically, currently seems as though it may lead the nation forward for a time.
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.