Consumer spending: The headlines and reality

The headlines:

1 Consumer spending is bustling and likely propelled strong overall economic growth in the recently completed second quarter.

2 U.S. retail sales rose solidly in June as households boosted purchases of automobiles and a range of other goods, cementing expectations for robust economic growth in the second quarter.


Retail sales remain depressed.

Even ignoring the original trend path, the next chart illustrates, considering only the post-recession period, that between late 2014 and mid-2017, retail sales faltered, dropping below the new and lower trend path. The recent “bustling” is the result of sales climbing back to the lower trend path.

If the economy is strengthening, why is the 10-yr – 2yr yield spread dropping fast?



1 Comment

  1. // Reply

    It’s ok if the yield spread flattened at higher levels. Of course, no sign of that yet

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