May Retail Sales Looking Soft

Last week we learned that seasonally-adjusted car and truck sales were down a little from April, which were down a little from March, which were down a little from February, which were down a little from January, which were down a little from December (see Chart 1). Today we learned that seasonally-adjusted chain store sales in May, according to the International Council of Shopping Centers (ICSC) were down 0.7% from April. Nominal gasoline prices may energize nominal May retail sales to be reported next week by the Census Bureau. But the sales reported by the motor vehicle producers and by the ICSC suggest that May retail sales ex gasoline will be on the soft side. Real personal consumption expenditures were flat in March and were up only 0.2% in April, thanks largely to heating bills. May is shaping up to be another month of anemic real consumer spending. But the housing recession is contained? Businesses are going to go on an expansion spending spree as demand for their product dries up? It truly must be a new era.

Chart 1

Bernanke Appears To Be A Team Player

Fed Chairman gave a speech today that appeared to be nothing but the warmed-over May FOMC meeting "minutes." In fact, I have yet to observe Bernanke saying anything different about the cyclical behavior of the economy and/or near-term monetary policy from what was communicated at the FOMC meeting prior to his speech or testimony. It would appear that Bernanke makes his policy case at the FOMC meeting, not in public. He then keeps to script until the FOMC decides to revise it. In other words, Bernanke appears to be trying to rehabilitate the Federal Reserve as an institution rather than a cult of personality.