Retail Sales Confirm What We Said Last Month - GDP Is Clocking In Over 3%

More and more evidence suggests the U.S. economy is in fact roaring, not contracting. Year over year, retail sales just hit growth of 6.1%, the highest level in nearly seven years.

The U.S. consumer is 70% of the U.S. economy. There is no way on earth retail sales are growing this much and the economy isn’t extremely strong.

We get additional confirmation of this from corporate sales across the board.

While there are literally dozens of ways through which companies can boost their earnings, sales are all but impossible to fake. Either money came in the door or not. As such they’re a great read on the economy, particularly the power of the U.S. consumer which makes up 70% of GDP.

With that in mind, consider that the average Year over Year sales growth for a basket of economically sensitive companies shows growth is near 5%…not 2% or 3%… 5%.

Interestingly, the slowest was in Wal-Mart, while the highest sales growth was in consumer discretionary items like Amazon and Coke. Typically, we see sales growth rise dramatically at Wal-Mart when the economy slows as more and more consumers become price sensitive.

With that in mind, the above table suggests, that despite all the negative claims by the media, the American consumer is going strong: he and she are shopping for higher priced, discretionary items.

Again, we’re talking about growth of 5%. You’d have to go back over 20 years to find another time when the U.S. economy was growing like this.

Now take a look at this table comparing Quarter over Quarter sales growth for the last three quarters for those same companies.

Looking at this, it appears the U.S. economy did indeed slow in the first half of 2019 but is now rapidly rebounding. Quarter over Quarter we’re seeing growth above 3%.

Again, the U.S. economy is roaring, not contracting. And this combined with the Fed’s aggressive monetary easing, is going to send stocks soaring to new all time highs. 

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Gary Anderson 8 months ago Contributor's comment

Half of China growth. Let's not get too giddy. The busiest stores are places like Home Goods. In other words, discount stores.