• US Retail Sales expected to keep a very stable and positive trend.
  • Most of the consumption trends look good, with optimist surveys and nice housing data.
  • Higher consumption is not translating into higher inflation.

The United States economy has been keeping its healthy and steady growth for the last years, with the labor market and, thus, the consumption components being the leaders on the rise. Few economic indicators paint this beautiful picture better than the Retail Sales numbers, published by the US Census Bureau, which have maintained monthly growths in the 0%-1% range for the best of the last 5 years. 

The June release for this key consumption indicator, due to be printed on Tuesday, July 16th at 12.30 GMT, is expected to stay at this pace, with a consensus estimate of 0.3% for the Retail Sales Control Group, the core measure of this group of data. The other couple of Retail Sales data, the headline number and the excluding-vehicles figure, are forecast to have grown 0.2% each during the last month.

All of these numbers would keep a growing pace consistent with the one followed for the last five years, although it would also mean a small, return-to-the-mean moderation growing path for the main US consumption indicators. As we see on our US consumption trends table, most of the key consumption indicators are showing positive or neutral trends through their last 10 releases. The Core Personal Consumption Expenditures show a more modest-but-healthy 1.5% quarterly average pace and despite some downtrends in minor, very-specific indicators such as the Consumer Credit Change or the Total Vehicle Sales the full picture is quite bullish.

Consumer Behavior Impact Last Trend Last 3 Last 5 Last 10
Retail Sales Control Group 3 0.50% Up 0.50% 0.48% 0.25%
Retail Sales MoM 2 0.50% Up 0.63% 0.38% 0.20%
Retail Sales ex Autos MoM 2 0.50% Up 0.60% 0.46% 0.16%
Personal Spending 2 0.40% Up 0.53% 0.36% 0.30%
Core PCE QoQ 2 1.20% Neutral 1.53% 1.80% 1.64%
PCE QoQ 2 0.50% Down 1.20% 1.62% 1.70%
Consumer Credit Change 1 $17.09B Down $14.96B $15.42B $17.22B
Redbook Index YoY 1 6.20% Neutral 5.57% 5.42% 5.51%
Redbook Index MoM 1 -2.20% Down -2.37% 2.42% -0.56%
Total Vehicle Sales 1 16.40M Down 17.00M 17.01M 17.18M
The leading US Consumer Confidence survey, published by the University of Michigan, has also been printing mostly positives, with a positive trend that nears its moving averages to the psychological 100 figure. Another minor consumer survey, the IBD/TIPP Economic Optimism also shows a relentless growing trend in its last 10 releases.
 
Consumer Confidence Impact Last Trend Last 3 Last 5 Last 10
UMich Consumer Sentiment Index 3 98.20 Up 98.47 97.52 97.33
IBD/TIPP Economic Optimism 1 56.60 Up 56.13 55.66 54.77
Another one of the key elements to judge the US consumer behavior is the housing purchase numbers, which have also been pointing upwards most recently. Both the Existing and New Home Sales month-over-month indicators are showing steady progress, which should mean that the US average consumer is still in a good place, with a good spending ability on its pockets and bank accounts.
 
Housing-related Consumption Impact Last Trend Last 3 Last 5 Last 10
Existing Home Sales MoM 2 5.34M Up 5.25M 5.24M 5.22M
New Home Sales MoM 2 0.626M Up 0.664M 0.653M 0.627M
Housing Starts MoM 2 1.269M Neutral 1.214M 1.207M 1.208M
Finally, probably the most puzzling data is the one which translates consumption into inflation, a traditional relationship that seems kind of strained these days. Both monthly and yearly Core PCE Price Index figures are kind of stuck, with the YoY numbers even showing some retracement in its last 10 releases. The monthly Personal Income indicator shows a more stable growth rhythm but it is not rising at the same pace as the pure consumption numbers, which probably means consumers are saving a little less to keep spending at their current levels.
 
Inflation-related Consumption Impact Last Trend Last 3 Last 5 Last 10
Core PCE - Price Index YoY 2 1.60% Down 1.60% 1.66% 1.79%
Core PCE - Price Index MoM 2 0.20% Neutral 0.13% 0.12% 0.12%
Personal Income MoM 2 0.50% Neutral 0.37% 0.24% 0.34%
All in all, the US consumption fundamentals seem to be keeping a good track, with the most-important Retail Sales figures flagging some green flags, at least for the short-term foreseeable future. Good news for the US Dollar bulls and eventually a bit more pressure on the Fed's camp if they want to cut rates soon.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Analysis feed

Latest Forex Analysis

Editors’ Picks

AUD/USD: On the back foot below 0.6600 amid coronavirus fears

AUD/USD declines to 0.6592 during the early Monday morning in Asia. In doing so, the pair remains on the back foot while extending losses after the gap-down to 0.6600 portrayed at the start of this week’s trading session.

AUD/USD News

USD/JPY extends losses below 111.50 as coronavirus spreads outside China

USD/JPY declines to 111.45, with the intra-day low of 111.28, amid the initial Asian session on Monday. That said, the pair stays under pressure as coronavirus pushes traders towards risk-safety whereas the pullback in the USD.

USD/JPY News

What you need to know for the open: Coronavirus risk-off themes rule the waves

The coronavirus remains front and centre of the theme for forex at the start of this week. Friday's close leaves a consolidative tone for today's open, if not a risk-off bias which could continue to fuel a bid into the greenback.

Read more

Gold pulls back from fresh seven-year high to sub-$1670 area

Gold prices rallied to $1,681.25, the highest since February 2013, during early Monday. The yellow metal recently benefited from the rise in the coronavirus cases outside China.

Gold News

FXStreet launches Real-Time Trading Signals

FXStreet Signals offers access to explanatory live webinars, real-time notifications when signals are triggered and exclusive membership to the company’s Telegram group, where users get direct guidance by our analysts and get room to discuss and interact.

More info

Forex Majors

Cryptocurrencies

Signatures