Manufacturing May Be Declining, but Real Retail Sales are Still Positive
By Dr. Joe Webb
Published: September 22, 2016
Data about manufacturing from the ISM and the Commerce Department have show a contraction compared to the prior year. In some cases that slowdown and contraction has been in process for 18 or more months. Retail sales and consumer spending have been the brighter spots of the economy. The inflation-adjusted growth rate of retail sales has been slowing since the beginning of 2015. Eventually, slowdowns in critical sectors like manufacturing become reflected in the retail data. As noted in a prior chart, e-commerce is the only major retail sector that is growing. Total retail sales are in danger of falling on a per capita basis. That is, if retail sales fall below a 1% growth rate, which is about the rate of population growth, per capita sales would be flat for practical sales. Further fall in the growth of retail sales will start “recession chatter” among economists and forecasters.