Retail sales stage a modest recovery

Retail sales were a bit disappointing in July. Year to date, sales are up 1.7%, but that is hardly enough to make up for the massive decline in sales that happened late last year. As this chart shows, the level of sales today is about 20% below where it should be if the economy were growing at the pace of the last 8 years. The good news is that the economy is growing and not falling off a cliff, as so many had feared late last year. The bad news is that so far it's growing very slowly.

This chart also provides yet more evidence that the "stimulus" spending generated by tax rebates earlier this year was the equivalent of pouring money down the drain. You can't "jump-start" an economy by taking money from one person and giving it to another. That doesn't create any growth, it just redistributes income. What's needed are policies that incent people to work harder, invest, and take risk. We can only consume more if we first produce more. That's the supply-side mantra that politicians ignore at their peril.