US Consumers Head Towards Recession?
The Fed-touted economic acceleration of 2015 is fast becoming a tired joke. June retail sales actually fell from the May number that was supposed to reflect a rebound from a snowy winter.
US Consumers Head Towards Recession?
The Fed-touted economic acceleration of 2015 is fast becoming a tired joke. June retail sales actually fell from the May number that was supposed to reflect a rebound from a snowy winter.
Released on 7/14/2015 8:30:00 AM for June, 2015
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What's the excuse now? Believe or not, Memorial Day and, get this, the later end to the school year. May's retail sales number had the cheerleaders out in force but the 'upswing' turned out to be seasonal adjustments and higher gas prices. The fact is that retail decay has been going on for six months now, despite what is supposed to be the best jobs market in decades.
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Why is this relevant for gold? We continue to think that the US economy is not on the verge of a strong second half recovery....the trend is clearly down. What are the consequences? The bear case for gold is dead. First, a slowdown is proof that the Fed is wrong about the economy. Second, no more than one Fed rate hike (if that), not the dollar-boosting normalization of monetary policy the market expects. Third, calls for more monetary stimulus. In short, loss of confidence in the Fed, the economy and the stock market which we see as critical to a breakout in the gold price.
It isn't just retail. Evidence of a rapid decline in demand is also evident in US imports, despite a stronger dollar.
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No wonder yesterday's NFIB Small Business Optimism Index was so disappointing.
Released on 7/14/2015 6:00:00 AM for June, 2015
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Small business optimism dropped very sharply in June, down 4.2 points to 94.1 with 8 of 10 components falling and pointing to weakness for the second half of the year. Earnings fell 10 points followed by current job openings and the outlook for company expansion which both fell 5 points.
This is not what the Fed was predicting.