June’s retail sales report landed at 0.2% month over month, the softest print in five months and a comedown from May’s upwardly revised 1.0%. On the surface, this reads like deceleration.
But the headline is misleading on its own. Gasoline stations bled 5.3% as pump prices dropped to $4.18 a gallon from $4.61, and once that category is pulled out, sales actually rose 0.7%. The number that actually feeds GDP models, the control group stripping out food services, autos, building materials and gas, came in at 0.5%.
This was enough to have nudged the Atlanta Fed’s GDPNow tracker to a 1.7% annualized Q2 estimate, and it’s why desks are walking their growth forecasts higher ahead of the July 30 GDP release.
Source: Census Bureau
So the tape says the consumer held up. The question worth asking before that gets fully priced is: which consumer?
