The first of today’s three significant economic releases was retail sales, which were up +0.4% nominally for the month of April. There were inconsequential small revisions to February and March. After April inflation of +0.4% is taken into account, real retail sales were unchanged. 

Here’s what the last 2.5 years look like:

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After the 2021 spring stimulus spending spree, except for one month last year, real retail sales failed to make any meaningful new high. Indeed their present level is close to their lows ever since.

On a YoY basis, real retail sales are down -3.4%. This is a very negative number. To show you why, I’ve added 3.36% to the YoY calculation for the last 21 months below:

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And here is the identical calculation going all the way back 75 years up until the pandemic:

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With the exception of one year during the Korean War, the 1966-67 near-recession, and one month in 2002, YoY% changes this negative only occurred in the depths of deeper recessions.

As I’ve also written many times, real retail sales (/2 YoY) are good if noisy short leading indicators for jobs, as shown over the recent short term below:

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We can expect a further deceleration in job gains in the months ahead. In fact, the only reason I suspect jobs have not started contracting already is the pent-up shortages in workers needed to accommodate the huge increase in spending that began with the stimulus spending spree back in 2021.

Finally, real retail sales make up about 1/3rd of real manufacturing and trade sales, one of the “big four” monthly coincident indicators most relied upon by the NBER in determining if the economy is in expansion or recession. Nominal real manufacturing and trade sales for March will be released later today.

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