This week’s economic reports are off to a rousing start with today’s updates on retail sales and wholesale prices for June.
Seasonally adjusted retail sales jumped 0.6% last month, the U.S. Census Bureau reports. That’s the best monthly rise since January.
The wholesale price report for June also brings good news: deflation was MIA. The Producer Price Index climbed 1.8%, seasonally adjusted, according to the Bureau of Labor Statistics. Quite a bit of that was due to a rebound in energy prices, but even after stripping out fuel there was a clear rise: core PPI advanced 0.5%. Overall, headline PPI is up three months running.
No, these numbers still don’t give us the all-clear signal—not even close. But the reports are encouraging nonetheless. One reason is that the numbers could have been worse, a lot worse.
As we’ve been discussing for some time now, the first step is stabilizing the economy, which begins with insuring that the deflationary risk is banished. We may be close to declaring victory on that front. Perhaps it’s time to say as much now. In any case, we’re still making progress. The apparent peaking in new filings for jobless benefits have been telling us that for several months.
But we’re still of a mind to expect that while the economy may be stabilizing, meaningful growth is still a ways off. One reason is that consumer spending, despite the latest number for retail sales, is likely to be weak for some time. Indeed, the labor market continues to destroy jobs at a robust clip. Repairing the trend will take time. Meanwhile, consumer spending will suffer. But at least it’s no longer in freefall. That’s no minor point for an economy that derives ~70% of GDP from Joe Sixpack’s spending habits.