023: Retail Sales 07-19-23

Have you ever contemplated the resilience of consumer spending in a slowing economy? Prepare to be enlightened as we explore this conundrum with Megan Horneman, our Chief Investment Officer. Megan takes us on a journey through the latest retail sales report for June, illuminating the surprising strength of consumer spending, particularly in discretionary items like furniture and electronics. She further sheds light on the significant increase in internet shopping during this period. 

However, this journey isn't just about the sunny side. Megan issues caution, reminding us that one month's data doesn't set a trend. She ventures into the stormy seas of mounting credit card debt, high credit card rates, and the looming dread of repaying student loans. Couple these with an economy that's losing steam, and we could see a squeeze on consumers in the coming months. Megan also raises thought-provoking points about the retail sales report, notably its lack of inflation adjustment, which paints a slightly different picture of real personal spending. Join Megan for this insightful economic analysis and let us know your thoughts and queries via podcast@verdence.com.

Hello, this is Megan Horniman, the Chief Investment Officer for Verdens Capital Advisors and coming to you today with Markets, with Megan talking about some of the economic data that we received. Specifically on the consumer, the retail sales report came out for the month of June and what we saw was that consumer spending was actually much more resilient. In June we saw discretionary spending, so think of things on like furniture or electronics, especially internet shopping that saw a pretty big jump in the month of June. Again, one month is not a trend. We still think the consumer has quite a bit of headwinds ahead of themselves, whether it's the credit card debt that's growing at a double digit pace, especially with credit card rates at a record high. We have student loan debt that has to start being repaid in the near term. So all of these things, as well as a slowing economy, are going to weigh on the consumer in the second half of this year. Other things that you have to take into consideration with this retail sales report is it's not inflation adjusted. So when we look at real personal spending, which is inflation adjusted, that's been actually flat for three of the five months that we have data for this year, so not a perfect picture for the consumer.

It was the headline. Is it a good report? It was a decent report, but we don't see that this is sustainable going into the second half of this year. That's all I have to date. Any questions, comments or feedback. Please feel free to reach out to podcasts at verdancecom.