• Durable Goods Orders expected to revive in May .
  • Retail Sales fell in May in all three categories.
  • Second quarter GDP estimate is at 10.3% annualized.
  • Markets will note but not trade on Durable Goods.

The US economy is in the unusual position of anticipating excellent second quarter economic growth absent a sustained expansion in its largest single component, consumer spending. 

Retail Sales are negative for April and May, the first two months of the second quarter, according to the categories tracked by the US Census Bureau. The latest GDPNow reading (June 16) from the Atlanta Fed has annualized growth at 10.3%. Consumer spending accounts for about 70% of US economic activity and it is hard to reconcile anemic or falling consumption with robust growth. 

Durable Goods Orders, the long duration sub-set of Retail Sales, are expected to increase 2.7% in May, after shrinking 1.3% in April. Goods Orders excluding the transportation sector are forecast to rise 0.7%, following a 1% gain in April. Nondefense Capital Goods Orders ex-Aircraft, a business investment proxy, is predicted to add 0.8% in May, after rising 2.2% in April. 

Durable Goods


Retail Sales

Overall Retail Sales declined 1.3% in May, considerably more than -0.8% forecast. The Control Group, which approximates the consumption component of the government’s GDP calculation, dropped 0.7% in May, on par with its -0.6% forecast. The ex-autos category fell 0.7% in May, well below its 0.2% forecast. 

Retail Sales


Two considerations about Retail Sales in the second quarter stand out. 

First, all three groups are negative for the two extant months. Overall sales are down 0.4% (May-1.3%, April 0.9%). The Control Group is down -1.1%, (May -0.7%, April -0.4%) and the ex-autos series is down 0.7% (May-0.7%, April 0.0%). It is the May results in overall sales and ex-autos that brings the two-month totals below zero. 

Second, all three categories saw substantial upward revision to the April numbers. The average positive adjustment across the three groups in April was 0.93%, 

Overall sales for April jumped to 0.9% from its initial flat release. The forecast had been 1%. The Control Group climbed from -1.5% to -0.4%. Its estimate was -0.2%. The ex-autos grouping, rose from -0.8% to  flat, making it the only one appreciable below its forecast of 0.7%. 

Retail Sales Data


Statisticians and economists have had a difficult time modeling the events of the past 18 months. 

Given the strength and consistency of the Atlanta Fed GDPNow forecast, the lowest of the 15 second quarter estimates has been 9.1%, there is an excellent chance that the initial May figures for Retail Sales will be revised substantially higher. 

Durable Goods and Retail Sales

Durable Goods are a subset of Retail Sales for items designed to last three years or more in normal use. Automobiles, refrigerators, hair dryers, computers and nuclear power plants all qualify as consumer or industrial goods. 

Due to their lifespan and usually higher cost, these purchases are considered a view into the medium and long term outlook for businesses and consumers. A plant manager is more likely to buy new machinery, or a family a new car when the sales and job prospects are good. 

How do we justify the projections for a sizable increase in Durable Goods purchases in May, 2.7%, with the 1.3% decline in overall Retail Sales. 

The simplest is to note that from January through April the initial Retail Sales figures have been revised higher by an average of 1.05%. A continuation of that adjustment would put the May Retail Sales near -0.25%. 

Still, a quarter-point decline is far from the forecast 2.7% gain in Durable Goods. 

A second consideration is the difference between the overall Durable Goods projection of 2.7% and the ex-transport estimate of 0.7%. 

Automobile sales plummeted during the lockdowns of the last 15 months. Many consumers have rushed to replace their aging vehicles in the past few months, purchases made more urgent by a scarcity of many makes and brands due to the world wide computer chip shortage. 

Similar logic holds for the commercial aircraft sales of Boeing Company of Chicago, whose sales have revived now that its 737 Max jet has returned to flying. 

It is possible that the particular circumstances of vehicle and airplane sales in May might account for a large portion of the 2.7% forecast. 


The specifics of American consumption patterns available in the Durable Goods Orders are not going to change market views on the US economy. The economic information is an elaboration on the already issued Retail Sales figures. 

The Federal Reserve’s upward revisions of its GDP, inflation and interest rate projections last week are the standard view of the US economy.  

Durable Goods will fit into that more optimistic assessment or not, but they will not impact trading in the equity, credit or currency markets.   

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. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news Join Telegram

Recommended Content

Recommended Content

Editors’ Picks

AUD/USD retreating from around 0.7000

AUD/USD retreating from around 0.7000

The AUD/USD pair hit 0.7008 before retreating, following US stocks’ behavior. Wall Street benefited from easing US government bond yields but ended the day mixed ahead of critical US data.


EURUSD bulls losing the battle around 1.0200

EURUSD bulls losing the battle around 1.0200

EUR/USD edged higher on Monday, but remains unable to clear the 1.0200 threshold, trading a handful of pips below the figure. The energy crisis in Europe and tensions with Russia undermined demand for the EUR.


Gold bulls looking to overcome the $1,800 barrier

Gold bulls looking to overcome the $1,800 barrier

Gold advanced on Monday, reaching an intraday high of $1,790.01 a troy ounce during the American afternoon, holding nearby. The greenback gave back the Nonfarm Payrolls report-inspired gains and eased on the back of retreating US government bond yields.

Gold News

Top 3 Price Prediction Bitcoin, Ethereum, Ripple: Are your bags packed for FOMO Season?

Top 3 Price Prediction Bitcoin, Ethereum, Ripple: Are your bags packed for FOMO Season?

The crypto market shows strength to start the second trading week of August, and key levels have been identified. Although it's still early market, current prices may be the ultimate discount in hindsight.

Read more

FXStreet Premium users exceed expectations

FXStreet Premium users exceed expectations

Tap into our 20 years Forex trading experience and get ahead of the markets. Maximize our actionable content, be part of our community, and chat with our experts. Join FXStreet Premium today!