Last week’s government guesstimate that second quarter 2014 real GDP growth will be 4% seems nonsensical on its face. There is no evidence of increases in real median family incomes or real consumer credit that would lift the economy from a first quarter decline to 4% growth in the second quarter. Middle class store closings (Sears, Macy’s, J.C. Penney) have spread into the Dollar stores used by those with lower incomes. Family Dollar, a chain in the process of closing hundreds of stores is being bought by Dollar Tree, the only one of the three Dollar store chains that is not in trouble. Wal-Mart’s sales have declined for the past 5 quarters. Declining sales and retail store closings indicate shrinking consumer purchasing power. Retail facts do not support the claim of a 4% GDP growth rate for the second quarter, and they do not support last Friday’s payroll job claim of 26,700 new retail jobs in July.

What about the housing market? Don’t the headlines accompanying last Friday’s payroll jobs report, such as ‘Hiring Settles Into Steady Gains,” mean more people working and a boost to the economy from a housing recovery? No. What […]