Retail Sales And Housing Starts In June Reveal Recovery's Shape
Published Friday, July 17, 2020, 8:30 p.m.
Amid bad news about the Covid crisis, two encouraging signs appeared last week on the economic horizon: retail sales and housing starts.
For the 12 months ended June 30, 2020, retail sales rose +2.7%.
For the 12 months ended April 30, retail sales revenue had plunged by 18.1%. In the 12 months ended May 31, retail sales rebounded but were still -2.4% lower than they had been a year earlier.
By the end of last month, retail sales fully recovered, rising by +2.7% from 12 months earlier.
To be clear, retail sales for the 12 months through June were back on track with the long-term growth path they had been on before the Covid outbreak.
While the bad news on the spread of the virus in recent days may dampen retail sales in the weeks ahead, the shape of the recovery in retail sales is likely to remain near a "V." A V-shaped recovery is about the best outcome you could get after a financial crisis. It's the quickest way to a return to normalcy.
Calculated by the U.S. Census Bureau month, retail sales are a key economic metric because they reflect consumer spending trends. Retail sales account for 29% of gross domestic product; total consumer spending accounts for 70% of GDP.
The other encouraging economic sign this past week was in the data on housing starts.
At nearly 1.2 million housing starts in June, a second month of breakout gains made this recovery from the virus crisis different from the last recovery.
The post-Covid surge in housing starts contrasts with the period following the global financial crisis of 2008. The Covid crisis is not perceived the same way as the financial crisis of 2008. Housing starts are close to where they have hovered for most of the past five years.
Housing starts is an important financial metric because it affects activity in employment, consumer purchases of big-ticket durable goods as well as real estate values.
07/17/2020 closing number: 3,224.73
The Standard & Poor's 500 (S&P 500) index gained 1.24% this past week. Closing higher for the third week in a row, the index closed Friday at 3,224.73, which is 36.15% from the March 23rd bear market low. Stock prices have swung wildly since the crisis started in March and volatility is to be expected in the months ahead.
Assets invested for life need not be unduly influenced by the near-term risk of the virus crisis, but the volatility is creating tax opportunities for some investors, especially individuals subject to required minimum distributions on qualified retirement accounts, such as IRAs and 401(k)s.
The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. It is a market-value weighted index with each stock's weight proportionate to its market value. Index returns do not include fees or expenses. Investing involves risk, including the loss of principal, and past performance is no guarantee of future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance quoted.
Nothing contained herein is to be considered a solicitation, research material, an investment recommendation, or advice of any kind, and it is subject to change without notice. It does not take into account your investment objectives, financial situation, or particular needs. Product suitability must be independently determined for each individual investor.
This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete, and is not intended to be used as a primary basis for investment decisions.
- A Financial And Tax Planning Strategy For This Week's Stock Market Plunge
- Having Trouble Tuning Out The Bad Financial Economic News?
- A Key Signal Of Strength At A Pivotal Moment In Economic History
- Despite Strong Jobs Report, Stocks Declined Last Week
- The Fed Risks A Recession To End Inflation, As Expected
- Stocks Snap Four-Week Win Streak
- Stocks Have Soared Lately, But What Should You Expect Near And Long-Term?
- Investing In An Economy Beset By Multiple Anomalies
- Despite Bad Economic News, Stocks Rose 4% In The Week Ended July 29, 2022
- Amid Bad Data Releases, Leading Economists Predict No Recession
- Good News: Real Retail Sales Dropped Fractionally In The Past Year
- Financial Economic News Analysis
- The Good News Is All This Bad News
- Four Signs A Recession Could Be Short And Shallow
- Odds Of A Soft Landing Shrunk After Friday's News
- Bad Inflation Surprise Sends Stocks Down Sharply
- It Could Be A Long, Hot Summer For Investors
- What A Difference A Week Makes
- Amid Stock Market Turmoil, +2.3% Growth Projected In 2022
- Staying On Track Amid The Ukraine And Inflation Crises
- For Investors, 2022 Is Turning Into A Test
- Is The Economy Brightening? Or Is The Federal Reserve Slamming The Door On Growth
- Financial Economic News In Perspective
- Stocks Closed Lower This Week On Inflation Fears