OCTOBER 21, 2019 – US RETAIL SALES FALL FOR THE FIRST TIME IN 7 MONTHS
The Commerce Department announced September retail sales fell 0.3 percent as households spent less last month. The decline was the first since February, and worrisome, as the consumer has been the driving force behind the economic expansion.
Consumption, which accounts for 66 percent of US GDP activity, had increased at 4.6 percent annualized rate in the second quarter, the most in 18 months. The slowdown in spending has raised fears the slowdown in the manufacturing sector is starting to move into the broader economy.
Indices show the probability of a recession are at levels consistent with a downturn, as capital spending and industrial production fall due to the uncertainties of the trade war and excess capacity.
The weaker than expected retail sales should convince Fed policy makers, who have been resisting another interest rate cut, to act this month. Flagging economic statistics since the September FOMC meeting indicates moderating economic growth and the need for additional rate cuts.
The Fed meets again on October 29-30.