US Retail Sales May Preview: Consumption is suddenly a trailing indicator by JosephTrevisani retailsales usa
, from the US Census Bureau, are forecast to gain 0.2% in May after climbing 0.9% in April. Sales excluding automobiles are expected to add 0.8% following April’s 0.6% increase. The Control Group category, which mimics the consumption component of the Personal Consumption Expenditures data series, is predicted to increase 1.5% after April added 1.0%.Over the six months to April Retail Sales have averaged 0.95%. That is a strong record and comparative to the best periods of the last decade.
Annual increases in Average Hourly Earnings have climbed from 4% in June 2021 to 5.2% last month. For the year to May AHE averaged 5.0%, for the haf-year 5.32%. The US Consumer Price Index averaged 6.86% for the last 12 months and 7.97% for the last six. A rough comparison has US households losing 1.66% in purchasing power over the past year and 2.65% since November. The CPI- AHE comparison is confirmed by the BEA’s Disposable Income and Real Disposable Income series.
The damage to family budgets is unavoidable and much greater than the 8.6% CPI rate tells because food and gasoline prices have risen even faster. In May food for home purchase was up 10.4% on the year and a gallon of regular gasoline was an astonishing 63% more expensive. American optimism has been fading for almost a year. The Michigan Consumer Sentiment Index tumbled from 81.2 in July 2021 to 70.3 the following month and has never looked back. The surprise plunge from 58.4 in May to 50.
If the current sales figures meet or best their forecasts, markets will assume worse and much worse numbers are on the way. If the May results are lower than predictions–a good probability–traders will assume the recession is already here. Credit markets are convinced the Fed will move faster. The 10-year Treasury yield has added 53 basis points this month to 3.371% and the 2-year is up a remarkable 86 points to 3.404%
For the US economy, consumer spending and job creation have been the pillars on which all optimism has been founded. When the first cracks, the second and then the economy will follow. Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets.
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