Following a string of stronger economic data, this morning’s retail sales report showed some unexpected weakness in a key area of the economy.
The Commerce Department reported retail sales in June were down 0.3 percent, following a 0.7 percent increase in May. Combined with the mild numbers in April, the second-quarter GDP should still show that consumer spending recovered from a weak first quarter, said Bob Hughes, senior research fellow at the American Institute for Economic Research.
Take out automobiles, gasoline and building materials, and retail sales were down 0.1 percent for the month. The brightest spot was electronics and appliance stores, which were up 1.0 percent, and department stores, up 0.7 percent.
But on its own, June’s retail sales numbers are surprisingly, broadly weak, Hughes said. There are several possible reasons for this, but “This is one of those where you have to wait and see. It may be noise or it may be a sign of softer growth,” Hughes said.
Tomorrow, we look forward to sharing with you our July edition of Business Conditions Monthly, our bird’s-eye look at the state of the economy, including our forecast for recession.