It’s starting to get scary: no progress in retail sales excluding gasoline since January.
With gasoline, retail sales have risen at an annual rate of only three percent (not adjusted for inflation) in the last three months. It’s time to start thinking about the possibility that consumers are finally cutting back on their spending, which would raise the risk of a pronounced economic slowdown, and possibly a recession. At this stage, though, I’m only raising the possibility, not proclaiming a new forecast.
Business Strategy Implication: Consumer goods companies should monitor sales more carefully in the coming months. Make sure you are not carrying too much inventory, and be cautious about your capital spending plans.