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With updates for Retail Sales and Industrial Production, we now have a majority of the Coincident data for the April reporting period. April data will continue to be reported and will replace some of the remaining assumptions.

Real retail sales growth has contracted in five of the last six months, currently declining at a 2.4% pace when measured on a smoothed six-month annualized basis.

Real retail sales is a volatile series. A six-month average can be used to smooth some of the monthly noise.
The smoothed real retail sales data hit a peak eight months ago. Next month, real retail sales will be nine months past peak, the longest streak without a recession in the last 30+ years.

In terms of magnitude, the smoothed real retail sales data is down roughly 1.7% from peak levels. The 2000 recession saw only a 1% decline in real retail sales, although the decline lasted longer, taking 17 months to reach a new peak.

Real retail sales growth is recessionary based on historical data. The smoothed series is eight months past peak and down almost 2%, conditions that are consistent with past recessionary periods.

The biggest difference is that this time, the Cyclical Economy hasn’t contracted yet. The Cyclical Economy is comprised of construction and manufacturing. The Cyclical Economy always deteriorates before the broader economy, like real retail sales.

 

 

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About Eric Basmajian / Economic Researcher

Eric Basmajian is an economic researcher focused on providing an advanced and comprehensive analysis of the business cycle.

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