Retail Sales Weak in June, In Case Anyone Was Paying Attention

Certainly Not the Press

 

The economic news and economic activity continues despite the focus on the debt ceiling negotiations that are consuming all of the oxygen of economic focus.  Most of the news has focused on the inflation figures for June, which show mixed results.  Overall inflation was down, but core inflation was up, and the overall conclusion is that inflation is not a current or immediate problem.

The news reports on the economy and current data focused on inflation and for the most part ignored the real news, the very slow growth in retail sales.  The Wall Street Journal did notice this very important indicator,

Retail sales—of everything from restaurant meals to clothes and cars—clicked up 0.1% in June after falling slightly the month before, the Commerce Department said Thursday.

Earlier this year, sales were notching monthly gains of 0.8% or more—not a gangbusters pace, but far stronger than now. Consumer spending accounts for about two-thirds of demand in the U.S. economy, making expansion difficult when consumers are subdued.

These charts are from the WSJ article, that flattening of the line in the first chart, not good, really, really not good.

Reports like this are a harbinger of future reports on growth and employment.  They explain why folks like The Dismal Political Economist are not very optimistic about the near term prospects for the economy. They do not, of course, explain why the President is focused on deficit reduction, rather than job creation,  which will make things worse in the short term.  It may be there is no explanation for that.