This morning, the Census Bureau, in its advance report on retail sales, revealed that seasonally adjusted July sales were "virtually unchanged" from June. Expectations were for a 0.2 percent gain, supposedly with "solid upside" potential. Oops. June's result stayed at its previously reported 0.2 percent increase.
Reuters did the "U-word" honors this time out: "U.S. retail sales unexpectedly stalled in July, pointing to some loss of momentum in the economy early in the third quarter." Someone needs to tell the wire service's Lucia Mutikani that no increase means no momentum. Over at the Associated Press, Josh Boak tried the deadpan approach.
The big "mystery" the forecasters can't seem to process is how sales can be flat when "so many" new jobs are being added. To his credit, Boak went there — eventually, but with other accompanying weaknesses (bolds and numbered tags are mine):
US RETAIL SALES FLAT IN JULY
U.S. retail sales were essentially flat in July, providing evidence that consumers have yet to shed their doubts about the economy despite recent job gains. [1]
... Spending dipped at auto dealers and department stores last month. The losses were offset by gains at grocery stores, gasoline stations, restaurants, clothiers and building material stores.
The figures suggest that Americans are hesitant to spend, which could limit growth for the economy. [1] Retail sales are closely watched because consumer spending accounts for 70 percent of economic activity.
Retail sales have flat-lined even though employers have added more than 200,000 jobs a month for the past six months. [2] Payrolls increased by 209,000 in July and 298,000 in June.
But those gains have yet to meaningfully boost wage growth above inflation, [3] causing spending to be more restrained.
... "Consumers just don't have the cash flow to finance sustained gains above 4 percent," [4] said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
... Americans are sending mixed signals about their willingness to spend. Consumer confidence jumped to its highest level in nearly seven years in July, according to the Conference Board. [5] That suggests Americans may be more willing to open their wallets.
[1] (two passages tagged) — I suspect that if consumers continue to refuse to spend money they don't have, their unwillingness will be blamed on naysayers (i.e., conservatives and Republicans) who are pointing out how weak conditions really are. That may even be accompanied by the government actively encouraging people to spend.
[2] — As to jobs added: First of all, 200K-plus job additions may seem impressive, but on a workforce-adjusted basis, the economy added far more jobs during the first 61 months after the early-1980s recession officially ended than it has in the 61 months since the Great Recession's official end in June 2009. Even looking at the most recent 13 months versus comparable months in the 1980s, the Reagan economy vastly outperformed the current Obama economy supposedly near-golden era of job growth:
Second, the nature of the jobs added is of significant concern. Over 14 percent of the payroll jobs added during the Obama "recovery" have been at temporary help services, even though that sliver of the economy is only 2 percent of the workforce. Additionally, many of the jobs being added at temp agencies and elsewhere are part-time in nature. The economy is still almost 3.4 million full-time jobs below where it was at its November 2007 peak.
Retail sales have "flat-lined" largely because the jobs many workers are getting aren't secure, and/or aren't full-time.
[3] — Looking at "wage growth" is myopic, because the focus there is on hourly rates of pay (even then, this graph shows a drop, not flatness). Even if the pay rates have grown at the same rate as inflation, the change in the number of part-timers and workers in low-paid positions should mean that the total all employees are collectively receiving in their paychecks isn't keeping up.
[4] — Shepherdson's 4 percent figure is artificially high. Based on the results of the past six months, consumers just don't have the cash flow to finance sustained gains above 2 percent. The average of the first and second quarters Boak disclosed in an unexcerpted sentence (1.2 percent in the first quarter and 2.5 percent in the second) is 1.85 percent.
[5] — Zero Hedge made an excellent point about the Conference Board's confidence report in late July after its release, namely that the overall confidence number, the highest in seven years, isn't supported by survey respondents' stated purchase plans. In another post, ZH refers to the situation as "the new normal definition of confidence." In other words, Americans have either lowered their sights, or they're telling survey takers what they want to hear about their overall confidence despite the discouraging financial realities.
From the first link:
Does this look like a confident set of survey respondents...
Plan To Buy In Next 6 Months:
- Car 11.6% vs 12.2% in June
- Home 4.4% vs 5.4% in June (lowest since Feb 2013)
- Major Appliance 46.5% vs 50.4% in June
The answer is "no," though you'll never see an admission of that in establishment press reports.
Also not factored in or mentioned: the effect of the completely invisible (as far as the press is concerned) Obamacare. The statist health care regime's policies with their high deductibles may be causing those affected to keep what little money they might have deeply planted in their pockets.
Cross-posted at BizzyBlog.com.
