Powell Will Find Much to Love in Retail Sales Letdown
The latest report landed with a mixed reception. But a middling consumption environment is just what the Fed ordered.
Shopping but not dropping.
Photographer: Eva Marie Uzcategui/Bloomberg
After a stretch of wildly positive economic surprises, the latest US retail sales data felt like more of a mixed bag: the top-line number missed forecasts and, partially in response, stocks drifted aimlessly between losses and modest gains. But in an environment in which Federal Reserve Chair Jerome Powell is trying to cover the “last mile” in the inflation fight, a middling consumption environment may be just what the economy needs.
Consider the underlying crosscurrents in the report. Overall, retail sales rose just 0.2% from the previous month, missing the consensus forecast for a 0.5% increase. But some of the miss came from weaker-than-expected auto sales, which in turn seemed to reflect pricing more than volumes. As an earlier report from Wards showed, sales of new light vehicles climbed 0.6% last month to a 15.7 million annualized pace, but it happened amid a third month of new-car deflation.