Latest / Markets with Megan: A Quick Financial Markets Update / Retail Sales Miss, Confidence Drops Too | S3 E160 | 08-14-26

Transcript

Retail Sales Miss, Confidence Drops Too | S3 E160 | 08-14-26 · Markets with Megan: A Quick Financial Markets Update

• 0:00
  Megan Horneman: Wow, that was some disappointing data on the consumer that we got today.
• 0:04
  Megan Horneman: It is Friday, August the 14th, and this is Markets with Megan.
• 0:07
  Megan Horneman: If you like this podcast, you can subscribe, hit the alarm bell, share it with your friends, family, colleagues, anybody who likes to read the headline news that we get from all the economic data and what it means for the markets and what does it mean for the future for your investments.
• 0:22
  Megan Horneman: So today we got a couple readings on the consumer.
• 0:25
  Megan Horneman: We got the July retail sales, and this was a big miss.
• 0:29
  Megan Horneman: The expectation on the headline was that it would rise 0.2%.
• 0:33
  Megan Horneman: It actually fell 0.3%, and that's following a decline of 0.2% in the prior month.
• 0:39
  Megan Horneman: We do know that a lot of this is impacted by the up and down we've seen with the prices of gasoline.
• 0:44
  Megan Horneman: But the control group, which takes out food, energy, gas, and building materials, this goes directly into GDP.
• 0:52
  Megan Horneman: That actually fell 0.4%.
• 0:54
  Megan Horneman: And that was and the expectation was actually for it to rise for the month at 0.3.
• 0:59
  Megan Horneman: So when we dig through these details with this report, it's important to realize that there was some give back.2% for just the month.
• 1:20
  Megan Horneman: So that was a big pullback there.
• 1:22
  Megan Horneman: Also, motor vehicles declined.
• 1:24
  Megan Horneman: Um, so did recreation, and then just overall internet sales as well.
• 1:29
  Megan Horneman: So this has some to do with consumers being a little bit more concerned about what's going on from the future as far as the business conditions, the inflation environment.
• 1:39
  Megan Horneman: We did see some pullback in spending, but it could be also heavily impacted, like I said, by that um pull forward of Amazon Prime Day.
• 1:46
  Megan Horneman: One of the discretionary items that we like to look at is consumers going out to eat.
• 1:51
  Megan Horneman: Um, so the eating and drinking places that actually increased about 0.5%.
• 1:56
  Megan Horneman: Now, these numbers are not inflation adjusted, so it's hard to tell how much of that is absolute an increase in more spending at um on restaurants, or if that has to do with restaurants raising their prices.
• 2:07
  Megan Horneman: But regardless, that did have a pretty solid move.
• 2:10
  Megan Horneman: So there still is some, I guess you could say, something left there with the consumer and um and their ability to spend.
• 2:17
  Megan Horneman: But then we also got the consumer, the preliminary reading on consumer confidence today, and that dropped for the first time in three months.
• 2:24
  Megan Horneman: Consumers are very concerned about the current economic conditions and also that inflation continues to be a problem.
• 2:31
  Megan Horneman: So, regardless of the numbers that we got this week with inflation, consumers are not happy about it.
• 2:37
  Megan Horneman: And we've talked about that, that even though the pace of inflation may slow, it doesn't feel any better for consumers.
• 2:43
  Megan Horneman: It's still rising.
• 2:45
  Megan Horneman: So you it's hard to tell a consumer that inflation's going down, it's not going down, it's just rising at a slower pace, but it's still rising.
• 2:52
  Megan Horneman: Um, what we, when it comes to inflation, one of the things we look closely at is what consumers think about inflation.
• 2:58
  Megan Horneman: Because if consumers think that inflation is going to increase more in the future, they there is a tendency they may pull forward buying because they're worried about prices in the future.
• 3:07
  Megan Horneman: And what that does is create a vicious cycle around inflation and just actually it could ignite inflation in the short term.
• 3:13
  Megan Horneman: We saw the one-year inflation expectation from consumers rise to 4.3% versus 4.2.
• 3:20
  Megan Horneman: That's not a great number, and the Fed needs to take a look at that.
• 3:23
  Megan Horneman: Also, the five to 10 year expectation for inflation, it didn't change, it stayed at 3.3%, but 3.3% is a far away from the Fed's 2% target.
• 3:34
  Megan Horneman: So what the Fed's been doing over the last 63 months is not working.
• 3:38
  Megan Horneman: Inflation is a problem.
• 3:39
  Megan Horneman: We think they should raise interest rates in September.
• 3:42
  Megan Horneman: However, the data might give them a little leeway to wait.
• 3:45
  Megan Horneman: We'll still have more data before their meeting.
• 3:47
  Megan Horneman: Um, we'll get another labor market report and we'll still get their PCE uh indicator as well.
• 3:52
  Megan Horneman: So we'll stay tuned to that and we'll be back with some more.
• 3:54
  Megan Horneman: That's all that we have this week.
• 3:56
  Megan Horneman: Um, if you want to share our podcast, you can marketswithmegan.fm.
• 3:59
  Megan Horneman: Thank you.