Retail Sales Preview: After July's Surge Here Comes The Hangover, And The Big Miss

Last month, ahead of the July retail sales report we said to "prepare for a big beat" (as signaled by real-time Bank of America debit and credit card spending data), and sure enough we were right as July retail sales rose 0.7% MoM (beating the 0.4% jump expected), the biggest monthly jump since Jan and the 2nd largest beat vs expectations of 2023.

However, far from a harbinger of economic growth, we explained that particular beat was a one-off event, largely the function of record Amazon's Prime Day sales, as well as a savings-account busting spending spree (see "US Consumers Paid For July Spending Spree By Burning Through $150BN In Savings").

And so, fast-forwarding to today with just hours left until tomorrow's August retail sales report, it appears out skepticism that the retail sales surge of July would sustain was accurate, because according to the latest monthly report from BofA tracking aggregated credit and debit card activity, total card spending per household (HH) dropped by 0.2% month-over-month (m/m) in August on a seasonally adjusted (SA) basis. Additionally, the bank's economists forecast a below-consensus 0.1% increase in the Census Bureau’s retail sales ex-autos estimate for August. In fact, card spending data signals a miss in every single retail sales category.