If the Fed’s commencement of additional corporate bond buying (i.e., on top of the ongoing ETF purchases) and talk of a Trump-sponsored $1 trillion infrastructure proposal wasn’t enough to embolden bulls, they’ll get another boost from a better-than-expected read on retail sales.
Spending rebounded sharply in May, rising a record 17.7%, more than double consensus estimates, while the ex-autos print came in at 12.4%, versus expectations of a 5.5% rise.
Sales collapsed the most on record in April, so a rebound was assured, but this looks much more robust than anticipated.
All categories logged gains last month, and if you look at the breakdown, one thing that sticks out is a near 30% gain in restaurant receipts.
Of course, it’s easier to sell food and drinks to people when restaurants are open, so the sarcastic among you will simply ask “What was everyone expecting?” That’s fair, but you should remember that what counts right now is the trend and what can be surmised about the relative robustness of the recovery from the expected rebounds.
The absolute level of sales at restaurants is obviously still depressed, but again, it’s the trend that matters and the ferocity of the bounce.
Some (and perhaps quite a bit) of this is attributable to pent up demand, and one of the key questions going forward is how things will look once Americans have had a chance to get a haircut, buy some clothes and satisfy their need for human contact and food away from home. In other words, the question is “How durable will gains prove to be?”
In any event, for now the market will take what it can get, and May’s retail sales numbers more than delivered.
Americans will be Americans. Consume is in their DNA. For years they have been admonished for consuming and not saving. They don’t know any different. This should surprise exactly nobody
Indeed.
And if the estimates are accurate and we have 200,000 Americans dead by fall, the states that opened too early and didn’t insist on masks will have to shut down or send the excess Covid patients directly to the temporary cemeteries as the hospitals are all full. So much for the recovery. Ever the pessimist. Will we ever get the true figure of how many Americans died because of Trump’s ineptness?? (This leaves out the Kurds).