PCE

July PCE, Trade Deficit, Construction, and Factory Inventories Point to 3rd Qtr GDP Growth Over 3%

In addition to the Employment Situation Summary for August from the Bureau of Labor Statistics, last week also saw the release of four July reports that give us the lion's share of that month's contribution to 3rd quarter GDP, and in some cases suggest revisions to 2nd quarter GDP.  This post reviews those four reports, with an eye to assessing their impact on GDP growth.

Retail Sales Show No Growth for July 2016

July 2016 retail sales were a real Wall Street let down as there was no change from June.  Gasoline sales plunged by -2.7%, yet most retailers had declining sales.  Auto sales and Amazon prime day were not enough to salvage overall retail sales.  Without autos & parts sales, retail sales would have dropped by -0.3% for the month.

Consumer Spending Outpaces Income Growth Again

The June personal income and outlays report shows a 0.4% increase in consumer spending.  When adjusted for inflation, consumer spending rose 0.3%.  Personal income increased 0.2% while real disposable income increased 0.1% for the month.  This is decent growth in PCE.  From a year ago, real consumer spending has increased 2.8% while real disposable income has increased 2.2%.

The Impact of April’s Income and Outlays, Trade Deficit, Construction Spending, and Factory Inventories on GDP

With the first Friday of the month, the Employment Situation Summary for May from the Bureau of Labor Statistics was obviously the most widely watched release of last week.  But the week also saw the release of four reports for April that give us the lion's share of that month's contribution to 2nd quarter GDP, and in some cases suggest revisions to 1st quarter GDP.

1st Quarter GDP Revised to Show Growth at a 0.8% Rate

The Second Estimate of our 1st Quarter GDP from the Bureau of Economic Analysis indicated that our real output of goods and services grew at a 0.8% rate in the 1st quarter, revised up from the 0.5% growth rate reported in the advance estimate last month, as residential investment was revised higher, growth in private inventory investment decreased less than was previously estimated, and exports were down less than had previously been reported.

Retail Sales Rev Their Engines With 1.3% Increase

April 2016 retail sales really popped up as auto sales roared.  Retail sales increased 1.3% for the month and auto dealers sales surged by 3.5%.  Without autos & parts sales, retail sales still had a great showing with a monthly 0.8% gain.  Gasoline station sales have also shot up as prices rose, a 2.2% increase for the month.

February CPI down 0.2% on Cheaper Gasoline; 0.3% Rise in Core Prices Reduces Real PCE

Consumer prices for food and most goods and services were all up in February, but another big drop in energy prices dragged the overall index down.   The Consumer Price Index Summary from the Bureau of Labor Statistics indicated that seasonally adjusted prices fell by 0.2% in February after they had been unchanged in January and fallen 0.1% in December.

February Retail Sales Drop -0.1% On Plunging Gasoline Prices

The February 2016 Retail Sales report shows retail sales decreased -0.1% for the month as gasoline sales plunged by -4.4%.  Without autos & parts sales, retail sales still decreased by -0.1%.  Gasoline sales have dropped -15.6% from a year ago.  Declining gasoline sales are once again responsible for the disappointing figures, as without gas stations considered, retail sales increased by a modest 0.2%.

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