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Week In Review

Retail Sales

Retail sales rose 0.5% in May and were revised from -0.2% to +0.3% in April.

Our Take

What a difference a month makes. With sales down 0.2% in April, it looked like the consumer was struggling in Q2. This month’s strong report, including an April revision, shows that the consumer is in a much better spot. Though much of the recent economic data would seem to have pushed the Fed toward a rate cut, today’s retail sales report counterbalances some of the negativity.


The May consumer price index rose by 0.1%. Year-over-year, the index has risen 2.0%. The CPI, excluding food and energy, rose 0.1% in May and is up 1.8% over the last year.

Our Take

Inflation remains benign, reigniting calls for a Fed rate cut to prolong the current economic expansion. It remains to be seen how the Fed will answer these calls.


Chinese growth data for May, especially industrial production and fixed investment, came in much weaker than expected. President Trump indicated that his administration might increase the tariff rates on imports from China currently taxed at 25% if President Xi does not meet with him at the G-20 meeting.

Our Take

Chinese growth continues to slow sharply, and the trade conflict is probably driving at least part of this. While the Chinese government and the PBOC (People’s Bank of China) are taking some actions and have indicated a willingness to do much more to support growth, it is unclear how much they can accomplish in the face of the Trump administration tariffs and other actions. The Chinese economy will likely not be able to contribute as much to global growth as in recent years, and the run-up in credit in China increases the chances that a slowdown creates stresses in the global financial system.


California lawmakers passed a $214.8 billion budget this week. Governor Gavin Newsom now has 12 days to sign or veto the bill. The budget includes additional spending for public education, health care, and housing. In addition, funds will be added to the state’s reserve funds, which will bring the total projected amount in the state’s rainy-day fund to $19 billion. Many Democrats supported the budget proposal, while some Republicans claimed that there was too much spending.

Our Take

Governor Newsom is expected to sign the bill, which is his first budget since he was elected. California has worked hard to improve its fiscal health since the recession. This balanced budget and growing rainy-day fund indicates that California is continuing on the right path.

All expressions of opinions are subject to change without notice in reaction to shifting market conditions. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice.