- Two key consumption indicators to evaluate state of US economy.
- Severe drop in the UMich Consumer Sentiment in August could drag Retail Sales down.
- USD could sell-off in case of another disappointment, with fears of US recession looming.
The US economy has been performing well for quite some time and it has been the consumption sector (accounting for around 70% of the full economy) its main driver. This trend has even been more severe in the last months, with most consumption-driven indicators still going up while business surveys and economic activity indicators stabilized or swung down.
This is why Friday's bunch of data is particularly important, as Retail Sales full report for August (12.30 GMT) and Michigan Consumer Sentiment Index preliminary survey for September (14 GMT) are set to be released, the last big bunch of data ahead of next week's Federal Reserve meeting.
Hard data versus soft data in the US Consumption Table
The US Consumption Table shows the different stance between the two key indicators being released on Friday. The soft data, lead by the University of Michigan Consumer Sentiment Index, shifted down in August with a dismal 89.80 reading, a drop of nearly to ten points from the previous July survey, abandoning the upward trend it had been following for years.
That disappointment swung the trend indicator from "Up" to "Neutral", but another print in a similar sub-90 range could quickly turn the trend down. The preliminary September reading is expected to pick a bit of steam at 90.9, but another worse-than-expected reading would add pessimism and increase the fear of a recession in the US economy.
Meanwhile, the Retail Sales reports have been trending the right way for months, with all three key figures (headline, ex-Autos and the most-relevant Control Group) surging from around a 0.30% average in the last ten releases to a 0.5%-0.75% range in the last three. After the dismal August release in the UMich Consumer Sentiment survey, markets will be closely following the Retail Sales report for the same month, to see if consumer pessimism is already translating into the real economy.
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Expectations are already set for a modest reading (0.3% for Control Group, 0.2% for headline number), but things could That should weigh meaningfully in the US Dollar, which could trigger a sell-off on a worse-than-expected number.
|Consumer Behavior||Impact||Last||Trend||Last 3||Last 5||Last 10|
|Retail Sales Control Group||3||1.00%||Up||0.73%||0.64%||0.36%|
|Retail Sales MoM||2||0.70%||Up||0.53%||0.60%||0.28%|
|Retail Sales ex Autos MoM||2||1.00%||Up||0.63%||0.64%||0.28%|
|Core PCE QoQ||2||1.70%||Neutral||1.57%||1.68%||1.68%|
|Consumer Credit Change||1||$23.29B||Neutral||$18.33B||$16.55B||$17.94B|
|Redbook Index YoY||1||6.40%||Up||6.20%||5.58%||5.33%|
|Redbook Index MoM||1||-0.40%||Neutral||-0.93%||-1.30%||-0.45%|
|Total Vehicle Sales||1||16.90M||Neutral||17.00M||16.94M||17.05M|
|Consumer Confidence||Impact||Last||Trend||Last 3||Last 5||Last 10|
|UMich Consumer Sentiment Index||3||89.80||Neutral||95.47||96.72||96.28|
|IBD/TIPP Economic Optimism||1||50.80||Neutral||54.17||54.86||53.94|
|Housing-related Consumption||Impact||Last||Trend||Last 3||Last 5||Last 10|
|Existing Home Sales MoM||2||5.42M||Up||5.34M||5.29M||5.24M|
|Existing Home Sales Change MoM||1||2.50%||Up||1.10%||-0.40%||0.55%|
|New Home Sales MoM||2||0.635M||Neutral||0.636M||0.654M||0.637M|
|New Home Sales Change MoM||1||-12.80%||Down||-4.53%||-3.20%||-0.63%|
|Housing Starts MoM||2||1.191M||Neutral||1.238M||1.217M||1.204M|
|Housing Starts Change||1||-4.00%||Down||-1.93%||-0.08%||0.34%|
|NAHB Housing Market Index||1||66.00||Up||65.00||64.80||62.20|
|MBA Mortgage Applications||1||2.00%||Neutral||-2.43%||2.70%||1.20%|
|Inflation-related Consumption||Impact||Last||Trend||Last 3||Last 5||Last 10|
|Core PCE - Price Index YoY||2||1.60%||Neutral||1.60%||1.60%||1.71%|
|Core PCE - Price Index MoM||2||0.20%||Neutral||0.20%||0.16%||0.14%|
|PCE - Price Index YoY||1||1.40%||Down||1.43%||1.46%||1.55%|
|PCE - Price Index MoM||1||0.20%||Neutral||0.17%||0.20%||0.14%|
|Personal Income MoM||2||0.10%||Neutral||0.33%||0.32%||0.34%|
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