Retail sales were much stronger than expected for July calling into question a recession.

If the Federal Reserve is truly data dependent as they said they were after the rate cut in July, the retail sales data released last week would keep them on hold in September. The headline number was +0.7% for the month, double the consensus forecasts. This is a huge monthly growth. It followed the solid 0.3% growth in July and the 4.3% annualized growth in the second quarter. The internals of the report were even stronger. Sales were up 1.0% when the volatile auto sales data was excluded and 0.9% excluding both autos and gas. The control group portion of the report, which is used to calculate personal consumption expenditures, were up 1.0%.