June 2012 Retail Sales Slow For Third Straight Month:
Now it definitely isn’t a seasonal issue.
The U.S consumer is tapped out. After 41 straight months of unemployment rates above 8 percent and stalling income growth, the average spender is holding back. Retail sales for June 2012 came in below estimates at 5 percent lower than May 2012 and this is more evidence that businesses aren’t the only ones that have stopped spending, the consumer is in low demand mode. The retail sales sluggishness trend was the first 3 month consecutive move down since 2008
The U.S. consumer is responsible for two thirds of all economic activity and the 3 month trend of low retail sales suggests seasonality isn’t an issue. The warm weather in the U.S. did disrupt inventory assessments for many retailers but the consumer is shedding all nonessential spending. University related expenditures have decreased as parents cut back on all nonessentials with students opting to live at home instead of the dorm which could also impact back to school sales.
The U.S. economy is getting weaker and we expect Ben Bernanke to mention retail sales, and unemployment this week when he testifies in front of the House and Senate as well as the global economy that is also slipping toward more negative growth. Equity markets may be disappointed if they don’t hear news about QE3 but that won’t necessarily mean there are no plans to implement more easing.