Retail sales plunged in May by the largest amount in eight months as consumers slashed spending on everything from cars to clothing. The big drop raises new worries about the durability of the economic recovery.
A sharp decline in retail sales is concerning for an economy in which consumption accounts for more than 70% of GDP.
Personal Consumption Expenditures (PCE) As A %GDP and Personal Consumption Expenditures As A %GDP Average from 1947:
The 2009-2010 year-over-year, or velocity trend line, a measure of acceleration, has failed. Consumer spending, regardless of the headline reports, is losing energy. Don't be surprised to see increased discussions and a hasty passing of an Economic Recovery Act part II from Washington. Confidence, as reflected in the price of gold, is already discounting the possibility.
Gold-Adjusted Retail Sales (RSGLDR) and YOY Change: