– by a New Deal Democrat
June Retail Sales: A Slowdown Persists, Except for Motor Vehicles , As usual, retail sales are one of my favorite indicators because they tell us so much about the 70% of the US economy that is consumption, as well as being a short leading indicator of employment. Last year was a bust and June was no different.
Last month, retail sales rose 0.2% in nominal terms, but as consumer prices also rose 0.2%, real retail sales were unchanged:
In real terms, retail sales remain -3.1% below their 2021 peak.
Year-over-year comparisons, which were very negative, continued to be negative, albeit slightly less. The chart below also shows real personal consumption of goods, which tends to closely track real retail sales, albeit with a different deflator that makes it more positive:
While I won’t show the long-term graph, the simple fact is that going back 75 years, with rare exceptions a 2% annual decline in real retail sales is a recession.
Since real retail sales tend to lead the trend in employment by several months, non-farm payrolls are also shown higher in gold. The indication is that the slowdown in annual employment growth will continue in the coming months.
Finally, since a unique aspect of the current economic environment is the outsized role of motor vehicle sales, which have been severely constrained by a supply shortage – leading to large price increases as well – here is a comparison of the nominal total, motor vehicles and sales of ex-motor vehicles for the past few years, all normalized to 100 just before the 2020 pandemic recession:
