By now it’s old news that economic performance in the first quarter was a disappointment.
Most market watchers have consoled themselves with the view that most of the softness was a function of temporary factors, including harsh winter weather and a West Coast port strike. The narrative has the economy bouncing back in the second quarter, as those temporary factors fade.
However, based on the most recent April data, investors may, once again, be disappointed when the second-quarter gross domestic product (GDP) report comes in.
While the second quarter will almost certainly be stronger than the first and the economy should pick up by year’s end, so far the consumer isn’t playing to script.
Adjusted retail sales (retail sales less food, autos, building materials and gas stations) were flat in April, versus expectations for a 0.5% gain. Year-over-year adjusted retail sales are up less than 1%, the slowest growth rate since 2009.