Glass half....?

A broad measure of the “consumer” came out this morning. Retail sales showed a slight increase and bounce back from last quarter. But the trend seems to be down which is a little unusual given the ultra-low unemployment rate and recent pickup in wages.

A mixed bag report like this is hard to quantify because you can argue both sides - it’s good! No, it’s bad!. But the numbers are “moderate” enough that it might be hard to make a strong argument either way. So it tends to get dismissed.

My take is that it’s surprising to see a potential slowing trend given the strength in the labor market. I suggested in my last newsletter, I believe there is a structural demand problem. Boomers are retiring, savings rate is higher, …. I think we are entering into a period where consumption could be significantly less than it has been in recent history. Retail sales is a decent barometer of this thesis.

Also, the optimism in market doesn’t seem to be justified by this report. Markets these days are moving on wildly optimistic speculation on tweets and political rhetoric which is fine if you can back it up. I just don’t see the underlying fundamentals to support it. Reminds me of the kind of behavior I witnessed in the late ‘90s tech market bubble which makes me very cautious.

I guess I’m glass half empty these days.