Recent Updates
- Global Supply Chain Pressure Index (Mar, Apr)
- US: Job Openings and Labor Turnover Survey by State (Mar)
- US: New Residential Construction (Apr)
- Canada: CPI (Apr)
- Japan: NCI Economic Activity Index (May)
- more updates...
Economy in Brief
U.S. Mortgage Applications Continued to Slide Amid Higher Rates
The biggest declines have been in refinancing activity, while applications for purchase are just starting to crack...
UK Inflation Jumps
Inflation is at the highest rate since the series began in January of 1989...
U.S. Industrial Production Much Stronger than Expected in April
The increase in manufacturing output in April was once again led by motor vehicle and parts production...
U.S. Retail Sales Posted Solid Rise in April
Notwithstanding falling real incomes and declining confidence measures, consumer spending posted a solid increase...
U.S. Home Builder Index Took a Steep Drop in May
This is the fifth straight month that builder sentiment has declined...
Viewpoints
Commentaries are the opinions of the author and do not reflect the views of Haver Analytics.
The Many Links of Inflation Cycle: Hard Landing Is Needed to Crack Them
Peak Inflation & Fed Policy: A Relationship Which Should Worry The Fed And Scare Investors
Why Have the Yields on TIPS Been Negative in the Past Two Years?
"Core" GDP Suggests Economy Gained Momentum in Q1:2022
by Robert Brusca October 29, 2018
Even Japan’s three-month growth rate series shows exceptionally choppy retail sales performance (see Chart). Year-over-year sales creep higher. Six-month trends show robust gains. The truth of trend lies buried somewhere in these very different statistics.
While sales have fallen in September leading to some concern about the impact on quarterly GDP, total sales and sales by economic group for the most part show ongoing gains.
In real terms, the trends look a lot as they do in nominal terms but pitched at a lower rate of growth. Over 12 months, retail sales gains are at 1%; they have been stronger than 1% only twice over the past nine months in terms of their year-on year growth. Over six months, sales appear strong mostly because six months ago sales were exceptionally weak. The six-month growth rate is calculated on a very favorable basis this month.
While retail sales are up at a 2.4% pace in the just-completed quarter (see quarter-to-date in the table), they also are lower at a -0.3% annual rate in real terms because the CPI flared in the quarter.
Still, real retail sales trends in Japan are as hard to pin down as their nominal counterparts. Three-month real sales growth is at +0.1%, compared to +4.8% in August and to -5.5% in July. Japan’s retail sector has seen in a state of turmoil. And while there have been typhoons and weather events, the variability in retail sales for the nation as whole has simply been unusual. The year-on-year trend for real sales is steady but positive at a low rate of growth. Japan is probably still stuck in that low growth profile. And there is little doubt that the profile will be threatened by the ongoing trade wars since Japan trades most heavily with China and second most heavily with the U.S. Growth is in gear but nothing is assured.
Globally, growth is challenged. Mario Draghi is downplaying the European slowdown. China is fighting off slowdown effects dipping deeply in the well of debt as U.S. tariffs threaten. U.S. inflation after ‘flaring’ back to target is on the verge of undershooting again (so much for allowing overshooting). Some Fed policy officials think U.S. growth is becoming more durable. We will see how that plays out as the U.S. economy gets farther from the impact of extra spending to rebuild after hurricane damage and as the fiscal boost diminishes. Meanwhile, globally policy makers are taking growth for granted despite lack of inflation pressure and the presence of a broad-based slowdown. Should this slowdown and the threats to growth be taken more seriously? We are on the verge of finding out.