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Brian Wesbury
Chief Economist
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Bob Stein
Deputy Chief Economist
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| Retail sales dropped 0.2% in May |
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Posted Under: Data Watch • Retail Sales |
Implications: Despite dire headlines and political rhetoric, the US is nowhere near a double-dip recession. While overall retail sales dipped 0.2% in May, this reflects what we already knew, which is that supply-chain disruptions due to Japan's disasters have temporarily reduced auto sales. Excluding autos, sales came in very close to consensus expectations. In the past year, total retail sales are up 7.7% and sales excluding autos are up 8.2%. Once the supply-chain issues are resolved, within the next month or so, auto sales will pick up again. The details of the report show strength. "Core" sales (which exclude autos, building materials, and gas) were up a solid 0.4% including upward revisions to prior months. Even if these sales are unchanged for the rest of the second quarter they will still be up at a 5% annual rate in Q2. Factoring-in services as well as inflation, real consumer spending will probably be up at a 2% to 2.5% annual rate in Q2. Consumer spending continues to rise for two key reasons. First, earnings are growing due to more jobs, more wages per hour, and more hours per worker. Second, consumers' financial obligations (debt service plus other recurring payments like rent, car leases, homeowners' insurance, and property taxes) are now the smallest share of disposable income since 1995. Add on top of that a recovery in the auto sector as Japan heals, and the future looks bright for retail sales.
Click here to view the entire 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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