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