Consumer Credit Binge Hangover Sparks Slowdown in Retail Sales Growth

Following May's exuberant jump (revised even higher to +1.3% - biggest since Sept 2017) which coincided with a massive spike in consumer credit, June's retail sales growth slowed notably (+0.5% as expected).

Retail Sales ex-Autos beat expectations, rising 0.5% vs 0.4% expected, but slowing dramatically from an upwardly revised May spike of 1.3% MoM; but retail sales ex-autos and gas disappointed.

However, the control group's growth (ex-food, auto dealers, building materials, and gas stations) collapsed to unchanged in June (against expectations of a 0.4% MoM jump)...

 

Under the hood it was a mixed picture, with 8 of 13 major retail categories showed increases, according to the Commerce Department data.

Up:

  • Motor Vehicle and parts dealers: +0.9%
  • Furniture and home furnishing stores: +0.6
  • Building material and garden equipment: +0.8%
  • Health and personal care stores: +2.2%
  • Gasoline stations: +1.0%
  • Nonstore (internet) retailers: +1.3%
  • Food service and drinking places: +1.5%
  • Miscellaneous store retailers: +0.2%

Down:

  • Electronics and appliance stores: -0.4%
  • Food and beverage stores:  -0.3%  
  • Clothing and clothing accessories stores: -2.5%
  • Sporting goods, hobby, musical and book stores: -3.2%
  • General Merchandise stores: -0.8%

So, once again, retail sales seems as dependent on the gusher of available consumer credit as any sentiment-driven impact.

Comments

wwwww Mon, 07/16/2018 - 08:50 Permalink

"...[T]he control group's growth (ex-food, auto dealers, building materials, and gas stations) collapsed to unchanged in June (against expectations of a 0.4% MoM jump)..."

This metric makes sense because nobody needs any of those things.

MuffDiver69 Grandad Grumps Mon, 07/16/2018 - 09:08 Permalink

I was looking for a cheapy can opener for my sailboat the other day. Three choices in the Walmart and one said Made in America. It was six bucks instead of three dollars. This bad boy was what I remember as a kid. Weighed twice as much and could double as a sinker or blackjack...I bought the real American one that will outlast me...I’m surprised I had the choice.

In reply to by Grandad Grumps

itstippy Mon, 07/16/2018 - 09:17 Permalink

Motor vehicles and parts, building supplies, and home furnishings are all things people might buy on credit.  They're durable goods, so spreading the cost out over time is common for many household budgets.

Anyone who buys that other stuff on credit needs to take a serious look at their finances and make changes.  Buying food, gasoline, cosmetics, or sporting goods on credit is courting disaster.  Using a credit card for convenience is OK if you pay it off every month, but if you make minimum payments and run up the balance you will end up in big trouble.  

glenlloyd itstippy Mon, 07/16/2018 - 12:33 Permalink

@itstippy I think you'll find that there's a huge number of Americans using the CC as a cash management tool because they don't have enough incoming $$ to pay everything up to date.

That said, I'm in agreement with you, when you start to CC (or credit agreements etc) to buy these things you are getting into the deep water and a correction to buying behavior would be in order.

Don't buy anything on credit, don't have a CC anymore. Only reason I would have one would be to simplify gas purchases, otherwise they can keep the damn CC.

In reply to by itstippy

everything1 Mon, 07/16/2018 - 17:49 Permalink

I was surprised CC debt is nearing 1.5 trillion.  I also noticed plenty of banks are doing the balance transfers at 0% for a certain amount of time but are charging a fee of 3-5% of your total to make the transfer.  The debt is just being moved around from one place to another, a wonderful medley if I ever saw one.  I despise the credit card sometimes, but it makes things happen fast.  I actually racked mine up to $2500 this last month, ouch.  Not going to pay that whole thing off this month, but I'll come real close, it's time to eat out of the freezer for a couple of weeks.