“America goes shopping again,” exulted one commentator. “The American
consumer is back, big time,” chortled another. “Retail sales increase
notably more than expected in July reflecting across-the-board strength
in sales,” commented the more sober economists at Goldman Sachs,
reporting a 0.8 percent increase, the first rise in four months. The
figures surprised, exceeding the consensus forecast of 0.3 percent.
Throw in the nascent recovery in the housing sector and policy wonks,
for whom the real economy exists merely to provide grist for the
policymaking mill, and talk quickly turned to just how Federal Reserve
Board chairman Ben Bernanke and his monetary policy committee would
react. The consensus is that those who are hoping that Bernanke will use
the platform provided by the gathering of central bankers in Jackson
Hole, Wyoming, later this month to launch QE3 are likely to be
disappointed. The retail sales and other data, says Chris Williamson,
chief economist at Markit, “argue against the need for additional
stimulus from the Fed.”
It is well to remember that it is risky to project from one data point, in this case July retail sales. For one thing, retail sales figures are notably volatile: these sales dropped by 0.7 percent in June before rebounding in July. For another, sales in the recently ended second quarter dropped by 0.6 percent compared with the first quarter, the largest rate of quarterly decline since May 2009. And as if to reaffirm economic right’s title of the dismal science, economists at Société Général chime in with the thought that rising costs will likely depress real spending by consumers in coming months, “hinting at another round of downward adjustments to economists’ Q3 GDP growth forecasts.” So, to borrow from George Gershwin’s description of woman, the July retail sales figures may prove to be “a sometime thing.” If Bernanke believes that, and if the next jobs report proves to be unpleasant, he just might find some way to ease monetary policy further, to the applause of stock traders and the moans of those who worry about inflation and the recent uptick in yields on U.S. treasury IOUs.
Read more: http://www.weeklystandard.com/blogs/what-retail-sales-data-means_650172.html
It is well to remember that it is risky to project from one data point, in this case July retail sales. For one thing, retail sales figures are notably volatile: these sales dropped by 0.7 percent in June before rebounding in July. For another, sales in the recently ended second quarter dropped by 0.6 percent compared with the first quarter, the largest rate of quarterly decline since May 2009. And as if to reaffirm economic right’s title of the dismal science, economists at Société Général chime in with the thought that rising costs will likely depress real spending by consumers in coming months, “hinting at another round of downward adjustments to economists’ Q3 GDP growth forecasts.” So, to borrow from George Gershwin’s description of woman, the July retail sales figures may prove to be “a sometime thing.” If Bernanke believes that, and if the next jobs report proves to be unpleasant, he just might find some way to ease monetary policy further, to the applause of stock traders and the moans of those who worry about inflation and the recent uptick in yields on U.S. treasury IOUs.
Read more: http://www.weeklystandard.com/blogs/what-retail-sales-data-means_650172.html
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