The US Consumer Pauses, Spending Halts, Economy Stalls

The US Consumer Pauses, Spending Halts, Economy Stalls

The US Consumer Pauses, Spending Halts, Economy Stalls

$DIA, $SPY, $QQQ, $VXX

“The consumer paused in July and with price pressures soft, the Fed members will probably gain a few more grey hairs.” — Joel Naroff, Economist

The Consumer Data:

  1. July Retail Sales and Wholesale Prices
  2. Sales: 0%; Excluding Vehicles: -0.3%/ PPI: -0.4%
  3. Excluding Food and Energy: 0%

The US consumer has been the basis on which the economy has depended for its anemic  growth. Now, we learn that households went on a vacation in July.

Retail sales want flat.

Excluding the automobile segment, overall demand declined.

Clothing, gasoline, food both at home and away, building materials, general merchandise, electronics and appliances all posted decliners.

Core sales, which best mirror the GDP numbers on consumption and exclude gasoline, vehicles, building materials and food services, were flat too.

If soft consumer spending was not enough of a concern for the US Fed policy makers, they also have to deal with soft wholesale prices.

Producer costs were down in July, led by drops in both food and energy.

Excluding those components, prices went nowhere fast. Even services posted a decliner.

Consumer spending has been robust and sometimes, some households cool their spending. But, the Fed members are still very afraid to raise rates until growth is solid and inflation in near or at their 2.0% target, and Friday’s reports do not provide them with any comfort that will happen any time soon.

That being the case, investors should be concerned about the soft consumer demand but happy about a Fed on hold. Savvy investors like to see better profits that are driven by stronger sales, they do not speculate. That is why there is so much cash on the sidelines.

Friday the 3 US major stock market indexes finished at: DJIA -37.05 at 18576.47, NAS Comp +4.50 at 5232.89, S&P 500 -1.74 at 2184.05

Volume: Trade was light with 692.8-M/shares changing hands on the NYSE

  • Russell 2000: +8.3% YTD
  • S&P 500 +6.9% YTD
  • DJIA+6.6% YTD
  • NAS Comp +4.5% YTD
HeffX-LTN Analysis for DIA: Overall Short Intermediate Long
Bullish (0.37) Bullish (0.27) Bullish (0.33) Very Bullish (0.50)
HeffX-LTN Analysis for SPY: Overall Short Intermediate Long
Bullish (0.38) Bullish (0.35) Bullish (0.29) Very Bullish (0.50)
HeffX-LTN Analysis for QQQ: Overall Short Intermediate Long
Bullish (0.30) Neutral (0.09) Very Bullish (0.58) Neutral (0.22)
HeffX-LTN Analysis for VXX: Overall Short Intermediate Long
Neutral (-0.20) Neutral (0.09) Bearish (-0.41) Bearish (-0.29)

Have a terrific weekend.

 

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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