The clock really was ticking on this so-called economic boom. A product in many economic accounts of Keynesian-type fantasy, the destructive effects of last year’s hurricanes in sharp contrast to this year’s (which haven’t yet registered a direct hit on a major metropolitan area or areas, as was the case with Harvey and Irma) meant both a temporary rebound birthed by rebuilding as well as an expiration date for those efforts. In short, starting with the month of September 2018, annual comparisons would be compared with the aftermath.
As noted at last month’s retail sales report, the results for August 2018 would be the last under the “boom”. Today’s report for September shows that, sure enough, there was no boom at least not one that wasn’t blown up onshore by Mother Nature. Consumer spending isn’t really falling off, rather it is being estimated properly again for the first time in a year. It’s not that the economy may be slowing, though there’s enough of that in the details, it’s that the boom never was. Not really.
In three out of the prior four months before September, total retail sales had grown by nearly 7% year-over-year in each; and in the fourth, by a bit less than 6%. The combination of gasoline prices plus last year’s reconstruction around the Gulf of Mexico may have made it seem consumer spending was picking up from the persistently awful economic conditions indicated right up until Harvey arrived in late August 2017.
In September 2018, by contrast, retail sales rose by just 3.12% – which is a level you would find during a mild recession. This will no doubt be blamed on recent hurricane activity and landfalls, but in August 2017 retail sales managed to grow by 4.14% despite a top 5 US metro area being covered by a biblical level of floodwaters.
This one account, surely to be followed by others, is reverting back to type now that the annuals are equalizing. That type more closely resembles the labor market, meaning the full suite of statistics outside the unemployment rate, those showing wages still historically stagnant and incomes sluggish since the last downturn that struck now three years ago.
