Housing is a mess, the stock market is sclerotic, earnings are down, inflation is out of control, gas prices are soaring, and employment is hanging on by a thread. The last domino to fall will be consumer spending and retail sales, and Merck economist Joseph Brusuelas says yesterday’s numbers indicate that it’s now happening:
The major narrative inside the data is the withering away of the impact form the fiscal stimulus. The decline in ex-gas spending is a precursor to the deterioration in real purchasing power that we anticipate will be the defining trend in the second half of the year. The well-timed policy response provided support for sales in April and May but declined perceptibly in June.