No matter how hard you crunch yesterday’s data, the number du jour reserves the right to surprise.
The latest example comes in today’s retail sales report for June, which the government unveiled this morning. The crowd was looking for a flat June; instead, the report showed that sales slumped by 0.9% last month–the largest drop since August 2005, as our chart below shows.
Lower sales at auto dealerships were the primary cause for the decline, accounting for roughly two-thirds of the overall slump in retail sales. But as one economist remarked, there’s reason to stay cautious. “These big declines [in auto-related sales] followed unexpectedly large gains in May and do not necessarily imply a marked erosion of retail activity,” wrote David Resler, chief economist at Nomura Securities in New York, in a note to clients today. But then he qualified the statement by noting: “Nonetheless, the data do translate into a sharp slowdown in consumer spending — to 1.5% to 2% — in the second quarter that could be the start of a much slower trend in consumer spending for the rest of this year.”