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Brian Wesbury
Chief Economist
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Bob Stein
Deputy Chief Economist
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 | Retail sales rose 0.4% in July |
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Implications: Including upward revisions for May and June, retail sales came in higher than the consensus expected, further undermining the case for a double-dip recession. Although "core" sales (excluding autos, building materials, and gas) were unchanged in July (including revisions), these sales were still up 4% from a year ago. The overall gain in retail sales in July came after two straight monthly declines. As we said a month ago, it is not unusual for recoveries to exhibit two-month periods when the pace of consumer spending temporarily slows down, particularly after a series of strong increases like the ones we had in late 2009 and early 2010. Now it seems this is exactly what happened and we expect to see continued gains in sales from here. So far this year, "real" (inflation-adjusted) cash wages for workers are up at a 3.4% annual rate. Meanwhile, the financial obligations of consumers – what we owe each month on our debts, plus other obligations such as rent and car leases – are, relative to after-tax income, back to the average of the last 30 years. Even the personal saving rate is back up to 6.4%, a level consistent with the early 1990s. Consumers may continue to say they are skittish, but they have the ability to keep increasing their spending.
Click here to view the full report.
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These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
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The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
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