Article source: ConstructConnect
The U.S. economy grew by +2.0% in the first quarter of this year and by +2.4% in the second quarter. Those figures are the month-to-month annualized percentage changes of ‘real’ (i.e., inflation-adjusted) gross domestic product (GDP) dollars.
One should not, however, grow comfortable with the thought that all is well, and a slowdown or recession has been averted.
A key component of GDP is consumer spending, which is almost half comprised of retail sales. While total retail sales are not in deep distress, they are certainly not as buoyant as they were a year or so ago.
In fact, total current dollar retail sales have been flat for a year and a half (see Graph 1). On a year-over-year basis in the latest reported month, July 2023, they were +2.0%. With inflation still running over +3.0% y/y, the difference means ‘real’ total retail sales were slightly negative.
There is a wrinkle in this narrative. Total retail sales are being substantially suppressed by the weakness of receipts at gasoline stations, -20.8% y/y. Again, there is an inflation twist. The steep slide in petrol sales ties directly to a -19.9% y/y change in the price of gasoline, according to the latest Consumer Price Index (CPI) data set.
