• 396 days Will The ECB Continue To Hike Rates?
  • 397 days Forbes: Aramco Remains Largest Company In The Middle East
  • 398 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 798 days Could Crypto Overtake Traditional Investment?
  • 803 days Americans Still Quitting Jobs At Record Pace
  • 805 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 808 days Is The Dollar Too Strong?
  • 808 days Big Tech Disappoints Investors on Earnings Calls
  • 809 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 811 days China Is Quietly Trying To Distance Itself From Russia
  • 811 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 815 days Crypto Investors Won Big In 2021
  • 815 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 816 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 818 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 819 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 822 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 823 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 823 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 825 days Are NFTs About To Take Over Gaming?
How The Ultra-Wealthy Are Using Art To Dodge Taxes

How The Ultra-Wealthy Are Using Art To Dodge Taxes

More freeports open around the…

Another Retail Giant Bites The Dust

Another Retail Giant Bites The Dust

Forever 21 filed for Chapter…

  1. Home
  2. Markets
  3. Other

Retail Sales Beginning To Feel Effects of Housing Slowdown

Today's May retail sales data provided more confirmation of a significant deceleration in economic growth. Total nominal retail sales were up a scant 0.1%. And without the boost from gasoline sales, which, themselves were probably boosted by gasoline price increases, retail sales were down 0.1%. The April-May average of nominal retail sales ex gasoline is up an annualized 1.7% vs. the first-quarter average. This retail sales aggregate grew at an annual rate of 14.2% in Q1. This is why we are forecasting second quarter real PCE growth of only 1.8% annualized vs. 5.2% in the first quarter.

It appears as though the slowdown in the housing market is starting to have negative multiplier effects on retail sales. For example, the April-May average of furniture and appliance sales is contracting at an annual rate of 2.7% vs. the Q1 average. These sales grew at an annual rate of almost 20% in Q1. Similarly, the April-May average of sales of building materials and garden equipment/supplies is contracting at an annual rate of 5.3% vs. its Q1 average. These sales grew at an annual rate of 33.6% in Q1. (Yes, I know that building materials et.al. are not part of PCE. But they do count n the GDP box score - under residential investment.) We've been told not too worry much about the effect on consumer spending from housing's slowdown because employment growth will pick up the slack. Well, employment growth is slowing, in part because of a slowdown in construction hiring. Is the slowdown in consumer spending that is upon us going to generate increased employment? You need to think in general equilibrium terms, folks - not partial equilibrium terms.

Wholesale Consumer Goods Inflation Moderating

Despite rising commodity prices - rising, that is until the past few weeks - wholesale price increases for consumer goods appear to be moderating. As shown in the chart below, the 6-month annualized rate of growth in the PPI for finished consumer goods ran at 2.4% in May. Its recent peak rate of growth was 9.8% back in December. When energy is stripped out, the 6-month annualized rate of growth in the PPI for finished consumer goods was only 0.5%. The recent peak rate of growth of this measure was 4.4%, hit way back in February 2005. It's that rascally "Owner's Equivalent Rent" that we have to watch out for in the May CPI, which will be released on Wednesday. Ironically, falling natural gas prices, which will hold down the all-items CPI measure, could boost OER. The core giveth and the core taketh away.


Back to homepage

Leave a comment

Leave a comment