US retail sales increased 0.2% in July, in line with expectations, albeit a touch lower than some forecasts anticipated. Nonetheless, that’s a sluggish gain and well below June’s 0.6% rise. On the other hand, let’s not overlook the fact that retail spending advanced for the fourth month in a row through July. In fact, save for March, retail sales have increased every month this year.
But no one will confuse the latest numbers as robust growth. Indeed, July’s momentum slowed considerably. Although you can expect the usual suspects to jump on today’s release as the new new sign of the macro apocalypse (it’s going to arrive one of these days, right?), stepping back and considering the broader trend suggests that a moderate rate of expansion is very much alive and kicking, or so the numbers available at this point suggest.
Retail sales increased 5.4% in July vs. the year-earlier level. That’s well above the 4.7% annual average for the past year, based on the year-over-year comparison in each of the past 12 months. It’s also a sign that nothing much has changed for the primary trend in retail spending relative to recent history: Moderate growth rolls on.
The latest numbers look a bit dicey, but it’s never clear what the short-term data is telling us. As usual, noise infects the numbers du jour, which is why the annual rate of return is a more reliable if still flawed measure of the trend proper. By that standard, retail consumption continues to bump around the +5% mark, which is a respectable pace for thinking that slow growth still looks like a reasonable forecast for the near term. A similar analysis applies to a broad review of economic and financial indicators.
Yes, all of this is subject to change as new data arrives. But for now, the status quo prevails, and nothing in today’s release provides compelling evidence to alter this outlook. Tomorrow, of course, is another day, which for some translates into: Pessimism springs eternal.