For all the talk about a “V-shaped” recovery in the US economy, the only top-tier data point to experience an actual, “real” rebound to pre-pandemic levels is retail sales.
Coming off the largest MoM gain in recorded history in May, spending came in hot again in June, rising 7.5% to wipe away the COVID plunge. Other purported “V”s you may have seen trotted out are mostly PMIs or charts showing the MoM change in a given indicator (e.g., nonfarm payrolls), which is obviously something quite different from the underlying series itself.
In July, US retail sales rose 1.2%, far less than the expected 2.1% gain, data out Friday showed. The June print was revised higher to 8.4%.
Both the ex-autos and control group prints look like solid beats. That could blunt the impact from the headline miss, which, while sizable, was not heinous by any stretch, especially when you consider how noisy the data is right now. The range was from unchanged to a 4.5% gain.
On a quick take, the numbers may suggest new containment protocols imposed across Sun Belt states grappling with large virus outbreaks eroded consumption at the margins. Some of what you see in the data may also reflect concerns about the future of government assistance programs and the waning of pent-up demand.
Ultimately, this is still a “V” — a real one.
It’s hard to see how this materially changes the narrative. It seems mostly neutral, but the headlines will probably be that the pace of the recovery “continues to decelerate”.
It goes without saying that there is no way to know what these numbers would be were it not for government assistance.