Thefirstindicationthesecondhalfoftheyearwillbemuchbetterthanthefirstwasprovidedlastweek. Retailsaleswerereportedashaving increased by a strong 0.6% for the month of July. In addition, both May and June’s results were revised upward. June moved from a first reported – 0.2% to an increase of 0.3%. This strong report indicates consumers came back in a very strong manner after listless growth in the first five months of the year. One month does not make a trend, but it is a start. In order to generate better Real GDP growth than the 2.1% growth in the first half of the year, consumer final demand must grow at better than 3.5%. There had been no indication this was going to happen until this retail sales report, but there needs to be more than one or two months. Without an improvement in the consumer spending sector, Real GDP growth and inflation will remain well below the Fed’s forecast.
Offsetting some of the strength of the retail sales data was the housing starts report. It came in below expectations and well below the June data. Housing in general has been running below 2016 rates of growth in the first half of 2017..