Latest / Markets with Megan: A Quick Financial Markets Update / The 9.2% Number Hiding Inside Retail Sales | S3 E155 | 07-17-26

Transcript

The 9.2% Number Hiding Inside Retail Sales | S3 E155 | 07-17-26 · Markets with Megan: A Quick Financial Markets Update

• 0:00
  Megan Horneman: The consumer continues to be resilient with the rising costs that we've seen.
• 0:05
  Megan Horneman: It's Friday, July 17th, and this is Markets with Megan.
• 0:08
  Megan Horneman: If you like this podcast, you can subscribe, hit that alarm bell that's down below.
• 0:12
  Megan Horneman: Also share it with your friends, your family, your colleagues, anybody who wants to dig into that economic data that we get on a regular basis and what those headlines mean and what does it mean for your investments?
• 0:24
  Megan Horneman: Let's dig into some information that we got about the consumer.
• 0:27
  Megan Horneman: Yesterday we received the monthly retail sales data for June.
• 0:31
  Megan Horneman: And this morning we released the preliminary reading on the University of Michigan Consumer Sentiment Index for July.
• 0:39
  Megan Horneman: So let's start with retail sales.
• 0:41
  Megan Horneman: When you look at retail sales, they came in relatively in line with expectations.
• 0:46
  Megan Horneman: And we did expect some weakness in the numbers because this does include gasoline sales.
• 0:51
  Megan Horneman: So we saw a pretty big down decline in gasoline station sales.
• 0:56
  Megan Horneman: They led this index from growing, it was up 1% last month in the month of May, only grew 0.2%.
• 1:04
  Megan Horneman: But when we strip out the volatile items, meaning food, energy, building materials, that's called the control group.
• 1:12
  Megan Horneman: And that actually grew 0.5% on a month-over-month basis, slightly lower than last month's 0.8%, but 0.5% is pretty strong.
• 1:21
  Megan Horneman: Now, I will remind people that these numbers are not inflation adjusted.
• 1:26
  Megan Horneman: So even though it looks like a strong increase on a um from an uh from a sales number, we it's very difficult to decipher what part of that is just higher prices and what's actually demand.
• 1:38
  Megan Horneman: Regardless, let's look at some of the areas that were strong.
• 1:41
  Megan Horneman: Um, motor vehicles were up almost 2% on the month.
• 1:44
  Megan Horneman: Electronics, these both do have um have us a little concerned because both of these do have some of those inflationary components in them.
• 1:52
  Megan Horneman: When you look at that control group, it's actually growing 9.2% on a three-month average to annualized pace.
• 1:59
  Megan Horneman: That's very strong when you look at that historically.
• 2:03
  Megan Horneman: Again, the weakness was basically in the gasoline station sales and then the food and beverages.
• 2:07
  Megan Horneman: Both of those are impacted by the decline we've seen in commodity prices and that what we did see in the month of June with the reopening of the Strait of Hormuz.
• 2:17
  Megan Horneman: Now, looking into July with that consumer confidence number that we got, much stronger than expected.
• 2:24
  Megan Horneman: Consumer confidence came in at 54.
• 2:26
  Megan Horneman: This takes us all the way back to prior to the the um the war with Iran.
• 2:31
  Megan Horneman: This goes all the way back to February of this year before we had a better number.
• 2:35
  Megan Horneman: Both components, uh, confidence on the current conditions as well as future expectations increased.
• 2:42
  Megan Horneman: Um, when you look at some of the components, it's you look at the household finances and what consumers see their finances versus a year ago.
• 2:52
  Megan Horneman: That's the highest we've seen since March.
• 2:54
  Megan Horneman: And then the big one is what do they expect in the future, the next 12 months, and that's the highest we've seen since February.
• 3:02
  Megan Horneman: So again, we're wiping out some of this war with Iran.
• 3:06
  Megan Horneman: And when you look at those expecting higher income over the next year, that was the highest we've seen since February.
• 3:12
  Megan Horneman: These numbers were also very diversified across income levels.
• 3:16
  Megan Horneman: So it does show that consumers were confident that the war had temporarily ended.
• 3:22
  Megan Horneman: We'll see when we get the final reading at the end of this month.
• 3:25
  Megan Horneman: If this continues, the war continues, and the gas prices that have gone up, if that continues, we'll see if that impacts this number and it gets revised lower.
• 3:35
  Megan Horneman: Again, this uh the markets today are really being impacted more on some news that's coming out of the AI uh space.
• 3:43
  Megan Horneman: So we're seeing some weakness in technology, semiconductors, and then we do have the next couple weeks, we'll really be overwhelmed by earnings reports.
• 3:51
  Megan Horneman: So that they'll be market movers as well.
• 3:53
  Megan Horneman: That's all we have today.
• 3:54
  Megan Horneman: If you want a history of rap podcast, you can go to marketswithmegan.fm.
• 3:58
  Megan Horneman: Thank you.