A Growth Recession?

Following today's retail sales and industrial production reports, the Atlanta Fed's GDPNow tracking model revised real GDP growth down to -1.5% (saar) during Q2 from -1.2%. Real consumption spending was lowered from 1.9% to 1.5%, while gross private investment now shows a decline of -13.8% instead of -13.7%. Consider the following:

(1) Retail sales. Adjusted for inflation, retail sales has been mostly falling over the past year, and did so again in June (chart below). Consumers satiated lots of their pent-up demand for goods, and then some, following the lockdowns in early 2020. To relieve their cabin fever they went on a buying binge, but were limited mostly to purchasing goods since the availability of many services remained limited. In recent months, consumers have pivoted to purchasing services. Some of them, of course, have had to spend a larger share of their budgets on essentials such as food, fuel, and rent, forcing them to reduce their discretionary purchases of both goods and services. Department store sales and housing-related sales both declined in June.