US Economic Growth Suddenly Collapses, As Even Goldman Says "Not Good"

Just days after we warned that the US economy is rapidly rolling over, as even the otherwise cheerful UMich chief economist Richard Curtin observed that over the past half century the UMIch survey "Sentiment Index has only recorded larger losses in six other surveys, all connected to sudden negative changes in the economy", today's dismal retail sales data was the straw that finally broke the back of any last trace of positive sentiment.

And shortly after we published the summary of the latest Bank of America Fund Manager Survey which showed that overall sentiment had collapsed with expectations for growth, profits and inflation all plunging in August...

... Goldman became the latest bank to chime in with its brutal assessment of the current situation summarized by strategist Chris Hussey's midday market intel note titled simply "not good." He explains why:

Retail sales declined 1.1% in July, more than expected, even as core retail sales were revised up for May and June. Notably, the decline comes without the government-imposed mobility restrictions and shutdowns that we witnessed earlier in the pandemic, suggesting that US consumers were electing to stay home and spend less — consistent with the sharp fall last week in the UMichigan Consumer Sentiment Survey. And a look into the individual categories reveals the sharpest deceleration in consumer discretionary items like electronics & appliances, as well as non-store retailers, also perhaps a reflection of some unemployment benefits expiring. A quick look at earnings today from consumer bellwethers WMT and HD also suggest consumer behavior is moderating.

On the supply side of the equation, Industrial Production rose in July, largely driven by an 11.2% increase in motor vehicle and parts manufacturing, while business inventories also increased. Builder sentiment also declined, hitting the lowest level since July 2020, driven by the current sales and prospective sales components, although future sales expectations remains unchanged.

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