Business Cycle Indicators and Retail Sales as of Mid-July 2021

Industrial production was released yesterday, and retail sales today.

Figure 1: Nonfarm payroll employment from June release (dark blue), Bloomberg consensus as of 7/16 for July nonfarm payroll employment (light blue +), industrial production (red), personal income excluding transfers in Ch.2012$ (green), manufacturing and trade sales in Ch.2012$ (black), consumption in Ch.2012$ (light blue), and monthly GDP in Ch.2012$ (pink), all log normalized to 2020M02=0. Source: BLS, Federal Reserve, BEA, via FRED, IHS Markit (nee Macroeconomic Advisers) (7/1/2021 release), NBER, and author’s calculations.

Industrial production continued to rise in May, below Bloomberg consensus (0.4% vs. 0.6%), and at a slightly slower pace than recorded in the previous month. Manufacturing production declined slightly (-0.1% vs +0.2% consensus).

Nominal retail sales grew again, particularly so when excluding autos. Retail sales might provide some insights into the trajectory of two of the series included in Figure 1 — manufacturing and trade industry sales, and consumption — but the fit is not extremely tight.

Figure 2: Retail sales excluding food services, in mn 1982-84$ (teal), manufacturing and trade sales in bn. 2012$ SAAR (black). Retail sales ex-food deflated using CPI-all. Source: Census via FRED, BLS, St. Louis Fed via FRED, and author’s calculations.

Figure 3: Retail sales and food services, in mn 1982-84$ (teal), consumption, in bn 2012$ SAAR (purple). Retail sales using CPI-all. Source: Census via FRED, BEA, BLS, St. Louis Fed via FRED, and author’s calculations.

The latest observation for real manufacturing and trade sales is April, for consumption is May. Extrapolating with reference to retail sales, continued growth seems likely for the two series, but hardly guaranteed.

Incorporating these retail sales data, Q2 NY Fed nowcast is 3.2%, Atlanta Fed GDPNow is 7.5%, and IHS-MarkIt is 8%.



5 thoughts on “Business Cycle Indicators and Retail Sales as of Mid-July 2021

  1. Moses Herzog

    IHS-Markit employing mainland China econometricians now to compile U.S. retail sales. Wow, never saw that one coming.

    In other news, I had to do a double take on this one, because the KGB description of this individual reminded me of a commenter on this blog who goes by pgl who says he skips over all of the comments that he feels the incessant need to reply to:
    “The report – ‘No 32-04 \ vd’ – is classified as secret. It says Trump is the ‘most promising candidate’ from the Kremlin’s point of view. The word in Russian is perspektivny. There is a brief psychological assessment of Trump, who is described as an ‘impulsive, mentally unstable and unbalanced individual who suffers from an inferiority complex’. ”

    Interestingly, the Luke Harding co-authored Guardian article goes on:
    There is also apparent confirmation that the Kremlin possesses kompromat, or potentially compromising material, on the future president, collected – the document says – from Trump’s earlier “non-official visits to Russian Federation territory”. The paper refers to “certain events” that happened during Trump’s trips to Moscow. Security council members are invited to find details in appendix five, at paragraph five, the document states. It is unclear what the appendix contains.

    “It is acutely necessary to use all possible force to facilitate his [Trump’s] election to the post of US president,” the paper says.

    How does a person reply directly to the comments made by the same commenters they claim they skip over?? I guess you’d have to ask one of the more annoying multiple personalities pgl has been clinically diagnosed as having, he goes by the name “Captain Mortimer” and claims to be a direct descendent of Slavic warlords.

    I’m surprised General Milley’s late term interactions with donald trump haven’t gotten more attention lately. Maybe after Business Insider copy/pastes something out of NYT and then “TPM” copy/pastes it out of Business Insider and then pgl finally reads it, then “Captain Mortimer” will don his superhero suit and pass it on to all of us here. If Captain Mortimer can actually quote it accurately, that should be fun.

  2. Moses Herzog

    I didn’t mean to be too blasé about Menzie’s post, because about 80% of Menzie’s posts are great (about another 19% of Menzie’s posts, I would only describe as “good” or “solid”, oh so shameful). And this post is a great post, Menzie always brings his “A game” when the Macro barometers get more crazy, which they kinda are now.

    But, you know, I am not in the habit of questioning IHS-Markit. That’s a dangeorus spot to be in—disputing IHS Markit forecasts—so I avoid it, as IHS-Markit is like Goldman Sachs, and some others not immediately coming to mind now. I mean they are one of the great ones and you don’t want to be locking horns with them (or I don’t) because you’re gonna lose that most of the time. But this is one I have to “take issue” with IHS-Markit’s number on retail sales. I’m left wondering, and not trying terribly hard to be smart-aleck right now, I mean, does IHS-Markit take things like this into consideration???~~~

    Because if IHS-Markit does take these numbers into consideration, including, Springfield Missouri, the entire states of Arkansas, Oklahoma, and others, all of the “little” “pockets” of Delta variant surges start to “add up”, and I’m having a hell of a time figuring out how IHS-Markit pulls 8% out of that context. And I promise all assembled that if I didn’t take that as a pretty heavy weight, I wouldn’t have the nerve to question IHS-Markit’s numbers on anything, let alone their retail sales 8%, which I find to be rather a flight of fancy.

    1. Menzie Chinn Post author

      Moses Herzog: In its nowcasts (if you get the emails), you’ll see that the nowcasts (e.g., for Q2 and the quarter we are now in) are bean counting exercises. For the forecasts, they incorporate their views on how the delta variant will affect economic activity.

      1. Moses Herzog

        I think maybe some of those are free?? I’ll have to look again and see if I can get any of those free, it shocks me some of the big bankers have those free email letters~~obviously most of the better stuff is premium content, which is fair. Either way I appreciate the info. Sometimes you can kind of “cheat” and get the bank stuff off of ZH blog (which is 3/4ths the reason I check in on ZH blog). But actually I don’t see much IHS Markit stuff over on ZH.

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