As always, you should read New Deal Democrat’s take on the latest weekly high-frequency economic data.
The gist is that things are mixed: Employment data is OK. Housing data is good. Consumer data is bad.
In fact, you can see from this chart that retail spending is threatening to roll over in a way that we haven’t seen yet since the last recession. It’s not decisive, and the year-over-year growth is still positive, but it is worrisome.
As such, the recession question comes down to two related issues.
Weekly indicators were quite mixed. Initial claims, especially as measured over 4 weeks, are sending a good signal. Housing prices are firming. The long leading indicators of housing (especially refinancing), real money supply, and corporate bond yields also continue to be positive. Consumer sales were weakly positive. On the other hand, gasoline prices and sales are a negative. Railroad data was mixed, as were purchase mortgages, and real estate loans were negative. Shipping rates are slipping, and industrial commodities resumed their slide.
I believe we are going to see a very weak July real retail sales number. Going forward the issue as to whether we actually tip into contraction or rebound is probably going to hinge on energy prices and whether real wages turn positive enough to assist in consumer spending.
So watch those two factors: energy prices and personal income to figure out which way the consumer breaks.