Last Week’s Economic News in Review (July 21st, 2021)

July 21st, 2021

Retail sales grew, while consumer sentiment declined, and initial jobless claims hit a 16-month low.

Retail Sales

Retail sales rose to $621.3 billion in June, an increase of 0.6 percent over May’s total of $617.9 billion, the Census Bureau reported last week. When compared to the same period a year ago, June’s sales were 18 percent higher than June 2020.

Retail categories that saw significant gains in June included sales at department stores, which grew 5.9 percent; miscellaneous retailers, which expanded 3.4 percent; electronics and appliance stores, which increased 3.3 percent; and gas stations, which rose 2.5 percent.

“Heading into the back-to-school season, we can expect record sales as families purchase electronics, shoes and backpacks for in-person learning this year,” National Retail Federation President Matthew Shay told the Reuters news service.

Consumer Sentiment

Consumer outlook soured in July, with the Index of Consumer Sentiment dropping to a score of 80.8 for the month, which was down 5.5 percent from June’s score of 85.5, according to last week’s preliminary results from the University of Michigan Surveys of Consumers. That said, compared to the same period a year ago, this was 11.1 percent over July 2020’s score of 72.5.

The Index of Current Economic Conditions, which describes how consumers feel about the current state of the economy and their place in it, fell to 84.5 for July, which was 4.6 percent below June’s ranking of 88.6. When compared to the same period a year ago, July was 2.1 percent up from July 2020’s score of 82.8.

The Index of Consumer Expectations, which assesses how consumers feel about where the economy is headed, also dropped in July, declined to 78.4, which was 6.1 percent down from June’s score of 83.5. Still, when compared to last year, July’s score was 19 percent up from July 2020’s ranking of 65.9.

So what caused the sudden decline in these metrics? A variety of factors, according to the Surveys of Consumers’ Chief Economist Richard Curtin.

“This decline was caused by a misjudgment by consumers in the pace that the economy would recover as the pandemic eased,” he explained. “This involved both underestimating the economy’s ability to reactivate supply lines and restore jobs, and the resulting impact on inflation.

“Rather than job creation, halting and reversing an accelerating inflation rate has now become a top concern,” he continued. “Inflation has put added pressure on living standards, especially on lower- and middle-income households, and caused postponement of large discretionary purchases, especially among upper-income households.”

Initial Jobless Claims

In employment news, first-time claims for unemployment benefits filed by recently unemployed Americans during the week ending July 10th fell to 360,000, which was 26,000 claims lower than the preceding week’s revised total of 386,000, the Employment and Training Administration reported last week.

The four-week moving average – regarded as a more reliable measure of jobless claims – declined to 382,500 claims, which was 14,500 claims down from the previous week’s average of 397,000.

The report marked the lowest level for initial claims since March 14th, 2020’s total of 256,000, and the point for this average since March 14th, 2020’s four-week average of 225,500, according to the Administration.

“As life normalizes and the service sector continues to gain momentum, we expect initial jobless claims to remain in a downtrend,” Joshua Shapiro, chief U.S. economist for consultants Maria Fiorini Ramirez, told the Associated Press.

This week, we can expect:

Tuesday – Consumer prices for June from the Bureau of Labor Statistics; the federal budget for June from the Treasury Department.

Thursday – Initial jobless claims for last week from the Employment and Training Administration; import prices for June from the Bureau of Labor Statistics; industrial production and capacity utilization for June from the Federal Reserve.

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Omar Khamisa
Mission San Jose Mortgage
2111 W. March Lane, Suite B100
Stockton, CA 95207
Office: 209-651-2000
Mobile: 510-648-5535
Fax: 209-434-2311
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