The retail sales gain “feeds into the narrative we’ve been seeing which is consumer strength continuing to support the economy with a strong labor market and wage growth,” said Scott Brown, chief economist at Raymond James Financial Inc. “It’s consistent with consumer spending supporting the overall economy, but part of the strength we’re seeing in the second-quarter numbers is payback because the first quarter was so soft.”
Powell in congressional testimony last week left it all but certain that the Fed is poised to cut rates for the first time in a decade. Still, he told lawmakers that consumer spending has reliably driven growth and rebounded to a solid pace after first-quarter weakness.
The initial reading of second-quarter gross domestic product is due July 26. A survey this month showed growth probably slowed to a 1.8% annualized pace from 3.1%, though consumption was seen picking up.
The Fed’s industrial production report showed manufacturing was bolstered by a solid gain in motor vehicle output. Total industrial production, which includes mines and utilities, was unchanged as milder-than-usual weather reduced demand for air conditioning.
Bloomberg News.