The state of the American consumer in a single quote

Retail sales in July grew 2.7% year-over-year to a record $709.7 billion .

Retail sales were up an impressive 1% from the prior month , but I’d be reluctant to say they’re reaccelerating.

A cooling economy isn’t a bad thing — we seem to be experiencing a “goldilocks” set of conditions where economic activity is still growing while inflation remains cool.

Broad measures of inflation are way down from peak levels in the summer of 2022 and are now trending near the Fed ’s target rate of 2% . Three-year-ahead inflation expectations declined sharply by 0.6 percentage point to 2.3% , hitting a series low since June 2013 .

Housing starts fell 6.8% in July to an annualized rate of 1.2 million units, according to the Census Bureau .

NFIB ’s Small Business Optimism Index in July rose to the highest level since February 2022 .

Small business applications, while down slightly from the previous month , remain well above prepandemic levels.

Near-term GDP growth estimates remain positive.

While recession risks may be elevated, consumers are coming from a very strong financial position.