The amazing retail sales illusion show


Source: www.tradingview.com

Retail sales for June increased by 1%, above the forecasted 0.9% and better than last month's release of -0.3%. At first glance, this seems like another check for 75-100bps on 27 June. However, the retail numbers are nominal. When we introduce inflation, the columns on the right below 0 (red dashed line) show periods when retail sales didn't keep up with inflation. This includes the June print. I.e., there is a slowdown in real terms.

There is growing concern that the Fed will be too aggressive, ushering in recession. This piece of data throws in another variable that the Fed must consider regarding their next rate hike. This real slowdown hints at demand moderating, precisely what the Fed wants to see. Now is the time for the balancing act.

Image by Shahid Abdullah from Pixabay

Russell Shor

Senior Market Specialist

Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.

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