When consumer spending slips, it can send shockwaves through the economy. Consumer spending, after all, makes up 70% of the economy.
The best measure of consumer spending data is Retail Sales, a monthly figure describing how much money Americans are spending, and where they’re spending it.
Retail Sales unexpectedly fell in April and that would usually push mortgage rates lower on the prospect of a slowing economy.
Not so much this month, though, and the answer lies in the sector-by-sector breakdown.
Against expectations of a 0.4% increase, sales were down 0.2% in April. That downturn was clearly led by the performance (or lack thereof) in the Building and Garden Stores sector.
Its sales decreased by 2.3% month-over-month and the industry served as a parachute slowing down spending that is, otherwise, consistent and strong.
As we keep hearing in the press, housing is the most likely candidate to slow down the economy. It’s not a surprise or a secret and markets are acutely tuned in to the sector.
So, as Building and Garden lays an egg and drags down the overall Retail Sales figures, markets shrug. Overall this week, mortgage rates are slightly higher, still recovering from the Fed’s press release Wednesday.