Retail Sales Badly Miss Expectations, Why?

Not only did retail sales slow dramatically in August, but there were significant downward revisions in July.

Percent Change From Previous Month

(Click on image to enlarge)

Percent Change in Advance Retail Sales August 2020

Negative Surprise

The Advance Retail and Food Services report surprised to the downside today vs Econoday Consensus Expectations.

Totals were about 30-40% under projections and that is on top of huge negative revisions for July.

The "control group" projections were not even in the ballpark at -0.2% vs expectations of a 0.5% bounce.

The control group is an input into the consumer spending component of GDP and excludes food services, autos, gasoline and building materials. 

What Happened?

On July 25, Pandemic assistance checks of $600 per week ran out. 

About 30 million people were collecting checks.

30 million * $600 per week * 5 weeks = $90 billion.

Some of those people went back to work, but many of them didn't.

When I looked at the projections last night I thought they were off. 

The Cliff

Some thinking individuals saved some of their pandemic checks, and some others went back to work.

The rest faced the cliff. September rates to be worse.

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