Retail Sales Slide, Miss: Biggest Drop And Miss In 12 Months
If the worst retail sales number in 12 months doesn’t send the S&P to 1,700 nothing will. Because that is precisely the data point we got moments ago when the Census bureau reported June retail sales growth of 0.4%, missing expectations of a 0.8% print and down from a downward revised 0.5%. However, the only growth in the headline number was thanks to auto and gas sales. Ex autos retail sales were unchanged on expectations of a 0.5% increase, while ex autos and gas the print was down -0.1%, crushing hopes of a +0.4% increase. Any minute now, however, the Fed’s S&P500 trickle down wil, with a 4 year delay, hit the end consumer: the entire Princeton economics department pinky swears.
BIG MISS: RETAIL SALES CLIMB +0.4% (Est. +0.8%)
EMPIRE STATE MANUFACTURING SURVEY SURGES TO 9.46 (Est. 5.0)
Goldman Joins JPM In Cutting Q2 GDP To 1% Stall Speed; A “Funny Chart” Becomes Funnier
Last week it was JPM just somewhat contradicting Jamie Dimon’s “kid gloves” CNBC infomercial, when it slashed its Q1 GDP forecast from 2% to 1% (and about to be revised to sub-stall speed). Today, following the latest retail sales unadjusted disaster, it is Goldman’s turn to slash its Q2 GDP tracking estimate from 1.3% to 1.0%. Stall speed has arrived despite everyone’s forecasts for the this time it’s different glorious US economic renaissance (so far “deferred” each year since 2010).
Retail sales rose a smaller-than-expected 0.4% in June (vs consensus +0.8%), with a 1.8% increase in auto sales boosting the headline number. Core sales?excluding autos, gasoline, and building materials?rose an anemic 0.1% (vs consensus +0.3%) while core sales growth in May was revised down one tenth to 0.2%. By category, grocery store sales fell 0.2%, while general merchandise stores (including department stores) rose only 0.1%. In contrast, the smaller categories of apparel (+0.7%) and furniture (+2.4%) showed sturdier growth. Outside of core sales, sales of building materials declined 2.2%.
In light of weaker-than-expected retail sales growth, we reduced our Q2 GDP tracking estimate by three tenths to 1.0%.
Which, however, guarantees some sheer comedy value for the future when Goldman is forced to revise the following funny chart (one of three) from a mere hockey stick, to an all out vertical IMF vaulting pole.
Barclays cuts U.S. Q2 GDP forecast after trade
Did today’s retail sales miss contain a warning about the housing market?
Retail sales missed expectations today, as top-line sales came in at just 0.4% growth, vs. 0.8% expected.
Nomura finds one ominous nugget:
Building material sales were a major drag on overall sales, as they declined by 2.2% in June. This could be a result of the recent run-up in mortgage rates, but we have to wait for more housing data to conclude that this is actually the case. Housing starts and building permits data for June will be released on Wednesday….
Behold The Part-Time Worker Society: “We Won’t Start Hiring Full-Time People”
Once again, as always happens with a very substantial delay, two themes that have been covered extensively on these pages in the past much to the ridicule of the mainstream media, namely that while the US may have “No Manufacturing Jobs But More Waiters And Bartenders Than Ever” and that Obamacare has finally struck as “Part-Time Jobs Surge To All Time High; Full-Time Jobs Plunge By 240,000” are now begrudgingly covered and in fact, endorsed, by the very same MSM.
Enter the Wall Street Journal which blends the two themes well known to our readers, and writes that “More Restaurants Replace Full-Timers, Concerned About Insurance.”
To wit: “Ken Adams has been turning to more part-time workers at his 10 Subway sandwich shops in Michigan to avoid possibly incurring higher health-care costs under the new federal insurance law. He added approximately 25 part-time workers in May and June as he reduced some employees’ hours and replaced other workers who left. The move showed how efforts by some restaurant owners and other businesses to remake their workforces because of the Affordable Care Act may be turning the country’s labor market into a more part-time workforce.” In other words, the already worst paying jobs in the US are getting even more of the shaft, downgraded from full time to part time status. Precisely the New “part-time worker society” that we predicted would happen back in 2010…
Economists Across Wall Street Are Axing Their Forecasts For US Growth