{"id":1551,"date":"2019-06-14T10:47:42","date_gmt":"2019-06-14T14:47:42","guid":{"rendered":"https:\/\/naroffeconomics.com\/?p=1551"},"modified":"2019-06-14T10:47:42","modified_gmt":"2019-06-14T14:47:42","slug":"may-retail-sales-and-industrial-production","status":"publish","type":"post","link":"https:\/\/naroffeconomics.com\/?p=1551","title":{"rendered":"May Retail Sales and Industrial Production"},"content":{"rendered":"\n

KEY DATA:<\/strong> Sales: +0.5%; Ex-Vehicles:\n+0.5%\/ IP: +0.4%; Manufacturing +0.2%<\/p>\n\n\n\n

IN A\nNUTSHELL:<\/strong>  \u201cConsumers are consuming, even if\nmanufacturers are not manufacturing.\u201d<\/em><\/strong><\/p>\n\n\n\n

WHAT IT\nMEANS:<\/strong>  Consumer spending meet Samuel Clemens: The\nreports of their demise were both greatly exaggerated.<\/em><\/strong>  But don\u2019t blame economists, please.  The April retail sales numbers, which\ninitially came in as down, were revised to show a decent rise instead.<\/em><\/strong>  The government got the magnitude right but\nthe sign wrong.  Duh.  And in any event, economists expected and got\na sharp improvement in May.  We thought\nhouseholds were spending decently and that is exactly what is going on.  In May, demand rose in almost every major\ncategory, including vehicles, sporting goods, restaurants, electronics and\nappliances, general merchandise, health care and on the Internet.<\/em><\/strong>  Food and beverage stores were down modestly,\nwhile the shrinking department store component, not surprisingly, posted a\nlarge decline<\/em><\/strong>.  Those sales are\nbeing picked up elsewhere, which is why all those stores are closing.   Finally, there is a so-called \u201ccore\u201d retail\nsales number that best approximates the consumption number in the GDP\nreport.  It excludes vehicles, gasoline,\nbuilding supplies and food services and was up strongly in May and (after revision)\nmoderately in April.  In\nother words, households are still shopping. <\/em><\/strong><\/p>\n\n\n\n

As for the weakest link, industrial production rose\nin May as manufacturing posted its first gain of the year.  But let\u2019s face it, a modest rise after large\ndeclines in January, February and April (March was flat) doesn\u2019t tell me that\nthe industrial heartland is doing fine.<\/em><\/strong>  Manufacturing\nproduction is up less 1% over the year, which really says it all.  Indeed, what saved the sector were rebounds\nin the output of vehicles, plastics and electrical equipment, which had been faltering\nmuch of this year.  I am not sure that those\nincreases represent a reversal of fortune or just a temporary uptick.  Overall industrial production was helped by a\njump in utility output, but it is not clear if that was due to improved industry\ndemand or weather conditions.   MARKETS AND FED POLICY IMPLICATIONS:<\/strong>When\nthe markets find a sucker they move mercilessly and it appears that Jay Powell\nis that target right now.  Amazingly, there\nare a fair number of analysts that think we could get a rate cut at next week\u2019s\nFOMC meeting.  Really?  Meanwhile, the July meeting is considered a\nlay up.  I just don\u2019t believe it.<\/em><\/strong>Granted, the economy is not booming, but it\nis also not faltering and today\u2019s data make that clear.<\/em><\/strong> Yes, the Fed\nChair has shown that if the markets huff and puff enough they can blow down the\nwill of the Fed.  They did that in\nDecember and that has given investors the confidence that they can pressure the\nFed to provide the drug of choice, liquidity, whenever the going gets tough.  If we do get a rate cut, the markets will\nlikely rally, despite the reality that a 25 basis point reduction will do\nabsolutely nothing to the economy.<\/em><\/strong> But hey, there is so much out there\nthese days that bears no resemblance to reality that adding the Fed to the list\nwould not surprise me.  I grew up\nwatching Rod Serling\u2019s \u201cThe Twilight Zone\u201d and now we seem to be living\nit.  \n\n\n\n<\/p>\n","protected":false},"excerpt":{"rendered":"

KEY DATA: Sales: +0.5%; Ex-Vehicles: +0.5%\/ IP: +0.4%; Manufacturing +0.2% IN A NUTSHELL:  \u201cConsumers are consuming, even if manufacturers are not manufacturing.\u201d WHAT IT MEANS:  Consumer spending meet Samuel Clemens: The reports of their demise were both greatly exaggerated.  But don\u2019t blame economists, please.  The April retail sales numbers, which initially came in as down, … Continue reading May Retail Sales and Industrial Production<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-1551","post","type-post","status-publish","format-standard","hentry","category-economic-indicators"],"_links":{"self":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1551","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1551"}],"version-history":[{"count":1,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1551\/revisions"}],"predecessor-version":[{"id":1552,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1551\/revisions\/1552"}],"wp:attachment":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1551"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1551"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1551"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}