{"id":1569,"date":"2019-07-16T11:27:52","date_gmt":"2019-07-16T15:27:52","guid":{"rendered":"https:\/\/naroffeconomics.com\/?p=1569"},"modified":"2019-07-16T11:27:52","modified_gmt":"2019-07-16T15:27:52","slug":"june-retail-sales-industrial-production-and-import-prices","status":"publish","type":"post","link":"https:\/\/naroffeconomics.com\/?p=1569","title":{"rendered":"June Retail Sales, Industrial Production and Import Prices"},"content":{"rendered":"\n

KEY DATA:<\/strong> Sales: +0.4%; Ex-Vehicles:\n+0.4%\/ IP: 0%; Manufacturing: +0.4%\/ Import Prices: -0.9%; Fuel: -6.5%; Non-Fuel:\n-0.3%<\/p>\n\n\n\n

IN A\nNUTSHELL:<\/strong>  \u201cWith consumers consuming and manufacturers\nmanufacturing, the only thing the Fed has to worry about is inflation.\u201d<\/em><\/strong><\/p>\n\n\n\n

WHAT IT\nMEANS:<\/strong>  As Fed Chair Powell keeps saying, the\neconomy is at risk.  Wrong again, at\nleast when you look at the June economic numbers.<\/em><\/strong>  First there is the consumer, who seems to be\nquite willing to spend.  Retail\nsales rose more than expected in June and it wasn\u2019t just vehicle\npurchases.   Most categories, <\/em><\/strong>including\nfurniture, building materials and health care, posted solid gains<\/em><\/strong>.  We ate out and ate in and shopped\nonline.  About the only thing we didn\u2019t\ndo was buy electronics and appliances. \nWhile total gasoline purchases dropped, that was due to price declines.\nAnd it\nlooks like second quarter consumption could be better than forecast as the\nso-called core sales measure, which tracks the GDP consumption number, was up\nsharply.<\/em><\/strong>  This excludes vehicles,\ngasoline, good services and building materials. \nIn other words, the consumer is alive and well.<\/em><\/strong>  <\/p>\n\n\n\n

Meanwhile, the nation\u2019s manufacturers are expanding\noutput to meet the solid demand. \nManufacturing production rose strongly in June as most industries posted\ngains.<\/em><\/strong>  Only three of the eleven durable goods\nindustries reduced output, while only two of the eight nondurable sectors were\ndown.  As vehicle sales have moved back\nto very solid levels, the companies have boosted assembly rates sharply over\nthe past two months.  There\nwere some weak segments of note.  Machinery\nand electrical equipment and appliances reduced production sharply.  <\/em><\/strong><\/p>\n\n\n\n

As for inflation, if the costs of imports matter, and\nthey do, it is going nowhere.  Import\nprices fell in June, which hardly surprised anyone given the sharp decline in\nenergy costs.  But even excluding fuel,\nthe cost of foreign products was down.<\/em><\/strong>  Looking\nat the details, most components were either flat or lower and those that were up\nrose minimally.  Over the year, import\nprices were off 1.4%.  In comparison,\nbetween June 2017 and June 2018, the cost of imports was up 1.5%.  As for exports, the hurting farm sector got\na major reprieve as their prices surged. \nBut if you were a non-farm exporter, you had to sell at a discount.  <\/em><\/strong><\/p>\n\n\n\n

There were two other indicators released today that\nalso point to solid growth.  The\nNational Association of HomeBuilders\u2019 index moved up in July, pointing to a\nsmall improvement in construction. \nCoreLogic reported that in April, the mortgage delinquency rate hit its\nlowest level in more than twenty years. \nThat indicates household finances are in pretty good shape. <\/em><\/strong><\/p>\n\n\n\n

MARKETS AND\nFED POLICY IMPLICATIONS:<\/strong> Mr. Chicken Little Powell keeps telling us the sky\nis falling and that the Fed needs to act accordingly.  But while growth may be moderating it is not\nfaltering.  That is a big difference that\nshould not be difficult to comprehend. \nBut I guess the Fed Chair and his band of economic gurus don\u2019t seem to\nget the point<\/em><\/strong>.  It will be\ninteresting to see what the first print of second quarter GDP looks like.  It comes out on July 26th<\/sup>, just a\nfew days before the next FOMC meeting, which is on July 30-31.  Remember, this number can be revised quite\nsharply and the government doesn\u2019t have good data for numbers such as trade. We\ncould get a growth rate that is better than expected, though I still am in the\n2% range.  Indeed, as I asked last week,\nwhat does the Fed Chair say if the first estimate is closer to 2.5%?  Today\u2019s numbers do not rule out that\npossibility.<\/em><\/strong>  The\nFed seems committed to reducing rates and some economists are saying a\nhalf-point cut is possible.  <\/em><\/strong>There\nare Fed members who want a quarter point reduction, if only to take out some\ninsurance.  I have no idea what model\nthey are looking at, if they are looking at one at all.  My view is that a quarter-point reduction\naccomplishes nothing.  If you are worried\nabout a slowdown, do something about it and cut at least a half-point.  Otherwise, stopped playing games.<\/em><\/strong> We\nshall see.<\/p>\n","protected":false},"excerpt":{"rendered":"

KEY DATA: Sales: +0.4%; Ex-Vehicles: +0.4%\/ IP: 0%; Manufacturing: +0.4%\/ Import Prices: -0.9%; Fuel: -6.5%; Non-Fuel: -0.3% IN A NUTSHELL:  \u201cWith consumers consuming and manufacturers manufacturing, the only thing the Fed has to worry about is inflation.\u201d WHAT IT MEANS:  As Fed Chair Powell keeps saying, the economy is at risk.  Wrong again, at least … Continue reading June Retail Sales, Industrial Production and Import Prices<\/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-1569","post","type-post","status-publish","format-standard","hentry","category-economic-indicators"],"_links":{"self":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1569","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=1569"}],"version-history":[{"count":1,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1569\/revisions"}],"predecessor-version":[{"id":1570,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1569\/revisions\/1570"}],"wp:attachment":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1569"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1569"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1569"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}