It comes as no surprise, but it’s bracing just the same.
U.S. retail sales slipped last month, falling 0.1% from June’s level, based on a seasonally adjusted calculation, the government reports. Meanwhile, for the 12 months through July, retail sales rose a modest 2.7%. The casual observer may think that the numbers don’t look so bad. Year-over-year growth, after all, is still growth, and in the current environments that’s pretty good. Putting the numbers in economic context, however, suggests that the slowdown of late still has the upper hand.
Consider the chart below, which shows the rolling percentage changes in retail sales on a monthly and annual basis through July 2008. The red line shows that July suffered the first monthly decline in retail sales since February. Meanwhile, the black line reminds that year-over-year retail sales continued to retreat in relative if not absolute terms.
Clearly, the slowdown in retail sales is unmistakable. The broader trend can’t be denied. But that only reveals what’s passed. Thus, the two burning questions: How much longer will the downtrend go on? How bad will it get?