If we go by the track of the “dollar” in setting economic expectations, we would expect to have seen a noticeable drop in economic activity in the first part of the year followed by a very tepid rebound lasting only a few months (“rebound” is too charitable of a qualifier, more like “not getting directly worse”). The ugly appearance of the “dollar” run starting in July and really working over August suggests renewed slump ahead, fully taking down any notions of “transitory” “aberrations.” Several data points have already followed that line, including Gallup’s view of consumer spending.
This morning’s retail sales report, expectedly, conformed. Overall retail sales, including the artificial contributions of the auto sector, had dropped to recessionary growth rates below 2% from February to May (1.44%, 2.32%, 1.35% and 0.69%, respectively) before “rebounding” in the early summer (3.28% and 3.04%, June and July). The mainstream narrative took that as the end of the slump and a renewed, resilient and boosted (by energy savings, of course) consumer. But August retail sales were instead back under 2% (at just 1.55%) and once more recessionary.
Ex Autos, of course, the consumer looks much, much worse. August retail sales ex autos were flat at just 0.42% while ex autos ex food retail sales contracted for the fifth time out of the eight months of 2015 so far. In other words, August was far more March than June; not transitory.
The 6-month year-over-year average for retail sales remained at 2%, which is equivalent to July 2008 as well as the bottom of the dot-com recession. Ex autos, again, the comparisons are much worse. In fact, August results are uncomfortably far up the lists of the worst months of retail sales in the entire series going back to 1992 (with Y/Y comparisons starting in