The Monday Moneybeat

MEGAN BASHAM, HOST: Today is Monday, July 23rd. Thank you for turning to WORLD Radio to help start your day. Good morning. I’m Megan Basham.

NICK EICHER, HOST: And I’m Nick Eicher. Coming next on The World and Everything in It, the Monday Moneybeat.

American consumers spent more money in June. And in May, they spent even more than government economists thought they did.

For last month, retail sales rose half a percentage point. And that builds on a revised Commerce Department report for May of 1.3 percent growth in spending at stores and restaurants. The previous May estimate was just 0.8 percent. So the updated report is considerably higher.

Here’s what it all means and why it’s important: Economic growth is measured by a figure called Gross Domestic Product, GDP. Retail sales account for 70 percent of GDP, and the strong reports for May and June make it that much more likely that second quarter GDP will show a 4-to-4.5 percent annual growth rate.

That would mean the strongest economy in four years. Four percent growth in the economy is what President Trump has said his administration’s policies would produce.

Now, there’s one big cloud that hovers over the economy and that’s the trade war — Trump’s tariff threats and trading partners’ promises to retaliate. Tariffs raise prices for consumers and that could make them less likely to spend.

Two more government reports from last week: New home construction and industrial production.

BASHAM: The Federal Reserve reported that output of American factories, mines, and public utilities together rose 0.6 percent in June. And that marked a recovery from May, when industrial production declined half a percentage point.

Strong increases in factory output and more mining, driven by increased production of oil and gas, more than offset the lower output of public utilities.

EICHER: The Commerce Department report on housing starts for June was a slight cause for concern. It dropped 12.3 percent, to the lowest level since last September.

The question is whether the June report is just a blip, a sign of the volatility in the homebuilding numbers — or the start of a trend.

Year-to-date, construction of new homes is up almost eight percent. And the industry remains confident: the National Association of Homebuilders and lender Wells Fargo publish a builder-sentiment index. And for June, it stood at 68. For context, any number above 50 is positive.

BASHAM: A mixed week on Wall Street: three of the four major stock indexes saw slight gains, very slight, just half a percentage point or less. The winners were the Dow Jones Industrial Average, the Standard & Poor’s 500, and the smaller-company stock index, the Russell 2000.

The tech-heavy NASDAQ stock index fell about half a percentage point for the week.

EICHER: On the year, the NASDAQ has been the best performer. Year-to-date, it’s up 13 percent. The Russell 2000 is up 11 percent. The S&P 500 is up just 5 percent, and the Dow is almost flat on the year, up just over 1 percent.

And that’s today’s Monday Moneybeat.

(AP Photo/Charlie Neibergall) In this Wednesday, June 27, 2018, photo, a for sale sign is seen in front of a home for sale in Waukee, Iowa. 

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