In Focus: Retail Sales

The July retail sales data is due out tomorrow morning at 8:30am EST. A strong number will go a long way to help soothe the market. Last month retail sales decreased 0.9%, following an increase of 1.5% in May. We haven't had consecutive declines in retail sales since Sept.-Oct. 2003 and the consensus estimates are that retail sales will increase 0.2% and retail sales excluding motor vehicles will increase 0.4%.


As investors we care about retail sales because consumption is two-thirds of GDP and weakening consumption could mean that a recession is looming. If consumption remains strong worries that housing market weakness is hurting consumption will ease. If retail sales fall below the estimates look for a rough start to the morning in the markets and an increased chance that the Fed will cut rates in September.