Economic Data Deluge

More July economic data has hit the tape Friday morning, capping off a busy week in domestic macro information. From here, we enter a typically quiet period with the last remnants of Q2 earnings season trickling in next week ahead of a long Labor Day weekend. Volumes are expected to contract, and markets are not expected to head too far in either direction — barring any major news headlines that might affect more than just the stock market.

Personal Income for July far outperformed expectations, coming in at +0.4% (-0.4% had been expected), marking more or less a return to before the coronavirus pandemic hit the market. It’s also a welcome rebound from the slightly upwardly revised -1.0% posted for June and the -4.4% in May.

July Consumer Spending also came in better than expected at +1.9%, 30 basis points ahead of projections, though below the +5.6% reported the previous month. The Deflator reached +0.3% on the month, around +1% year over year. Importantly, we’re looking a month in the rear view with these numbers; expectations for August are currently not as robust, as relief from Congress has not yet arrived to help secure the U.S. consumer.

Advance Trade in Goods for July hit the tape noticeably worse than anticipated, however. The headline of -$79.3 billion was the worst we’ve seen since December 2018, which represented the deepest trade deficit in the metric’s history (which always kept dead-even until the 1970s, worsened in the 80s and fell off a cliff around the turn of the century).

Wholesale Inventories came in at -0.1% on the headline (July preliminary, meaning not all data may be accounted for), with Retail Inventories swinging to a positive mirror image of the -1.2% expected, to +1.2%. Retailers are accumulating goods ahead of this year’s holiday shopping season, which will be here sooner than most of us realize.

U.S. Exports last month bolstered higher 11.8% on the strength of July auto sales, which blossomed an eyebrow-raising 44.6%. Consumer Goods also performed well, +21.4% on the month. Again, we’re looking at past history here; for August to reach or even get near these levels would be a most-impressive development, but not expected at this stage.

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