Brace For A Big Miss In July Retail Sales

Just a quick note ahead of tomorrow’s retail sales data, which consensus expects to come in at -0.2% headline at +0.2% ex autos, but which will be a big miss.

Last week we pointed out that BofA’s latest internal debit and credit card spending data showed a sharp slowdown in the month of July (whether due to covid fears, new restrictions, burning through savings, an outsized slowdown in good spending, etc), with total BofA card spending down 1.3% on a month-over-month seasonally adjusted basis, the biggest drop in the past 12 months…

… and down almost double for retail sales ex-autos, which BofA founds shrank by 2.4% mom sa.

Today, when looking at its own card spending data, JPM also poured cold water on any hope of sustained economic activity in the US, writing that there is concern that the delta wave is depressing sentiment. On the heels of a drop in global business and consumer confidence in July, JPM eyed the University of Michigan survey which reported an unexpected plunge in US consumer confidence last Friday with the headline reading plummeting from 81.2 to 70.2 in August, refuting the far more optimstic Conference Board survey result.

This decline, JPM concludes, “aligns with recent indications that the Delta variant may be suppressing consumer spending and we look for a well below consensus 1.5% m/m drop in tomorrow’s July retail sales report.”

And so between two of the biggest issuers of debit and credit cards, both of whom are seeing a sharp slowdown in spending – as we observed last week in “A Sudden Negative Change In The Economy”: Consumer Spending Slides As Majority Now Expect A New Slowdown – we can conclude that tomorrow’s retail sales number will be a big miss to expectations…

… which of course should send stocks quickly to new all time highs.