Retail Spending, Home Sales, & More

Week in Review: June 17-21

The U.S. Senate passed a bill on Tuesday to speed up the licensing and construction of new nuclear power plants in a praiseworthy display of bipartisan lawmaking (the vote was 88-2). Competent and thoughtful legislation rarely makes headlines, but hey, that’s why you’re reading this newsletter.

This week brought us updates on the housing market, housing construction, retail spending, and hotter than heck temperatures.

Monday

TSA Checkpoint Travel Numbers

After record setting travel numbers last week, the number of passengers screened by TSA fell and is now just 5% above 2023 levels, the smallest gap since mid-April. This is consistent with retail sales data (right there below if you can see through the sweat), which also indicate that consumer spending is starting to hit the brakes.

Tuesday

Retail Sales

Retail sales inched just 0.1% higher in May and are up just 2.3% year over year. This is pretty disappointing, especially because this data isn’t inflation adjusted. In real terms, retail sales are down over the past year, which means people are purchasing fewer things.

The weak figure was driven by lower spending on gas (gas prices have fallen), furniture stores and building material stores (both of which reflect high interest rates and the lack of people moving), and restaurants and bars (there’s no quick explanation for this one other than more people are eating and drinking at home wondering why Kyrie Irving can no longer play basketball).

The only real bright spot here is eCommerce. Online spending had a good May and is up 6.8% year over year.

Retail sales have now been weak for the past couple months, another indication that consumer spending growth and likely overall economic growth are slowing. Make no mistake—the Federal Reserve is watching this like a hawk, and that’s why I think two rate cuts are on the breakfast table this year.

Industrial Production

Industrial production increased 0.9% in May, the largest monthly increase since January 2023. A chunky 1.3% rise in consumer goods production drove the increase.

Even with May’s strong performance, industrial production is up just 0.4% over the past year.  That’s not great. In fact, it’s akin to Luka Doncic on defense.

Gas Prices

Gas prices rose (by $0.005 per gallon), ending a streak of seven straight weekly declines. Gas is still $0.13 cheaper per gallon than one year ago.

Diesel Prices

Diesel prices increased for the first time in over a month but remain extraordinarily low by recent standards.

Wednesday