Part 1: What Recession?

Aug 28, 2023 | Macro Insights, No Bull Economics

Atlanta Fed 3Q23 Projections Post Banner

The Atlanta Fed’s GDPNow model is estimating a shocking +5.9% y/y real GPD increase for 3Q23 (official reporting date 10/26) which is notably adjusted for inflation. While this forecast is substantially higher than the Blue-Chip consensus estimates (the high-end of the range is still under 3%), it points to considerable retail strength…


  • The story starts with the 3Q retail outlook & the Atlanta Fed is now forecasting that real consumption expenditures (adjusted for inflation) will increase +4%. This contrasts with weak consumption during 2Q & and a possible 4Q deterioration with the resumption of student loan payments.
  • As reported in this post, retail sales increased an impressive +0.7% m/m in July, with +1.4% growth from eating places.
  • The bullish GDP forecast also factors in impressive strength in residential housing construction which increased +6.7% y/y in July despite record high mortgage rates.
  • In summary, government economic data tells a story of tremendous consumer strength driving substantial 3Q economic growth. In part 2 of this post, we will compare notes with the financial performance of the leading retail consumer companies.
Atlanta Fed Estimates 3Q23

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2Q23 Retail Same Store Sales

NoBull’s Retail Same Store Sales Report benchmarks 80+ large consumer retail companies by domestic same store sales including annual (2019 – 2022) and quarterly results (2Q22 to 2Q23).

Walmart Investor Presentation: Inflation Here to Stay

While general merchandise prices are lower y/y, they remain elevated compared to 2 years ago. As Walmart does not believe general merchandise and food (dry grocery) & consumable prices are ever going to completely disinflate, management suggests the need for a country-wide wage increase rebalancing.

Interesting Conversation with Fed Chair Powell

Okay, Powell didn’t actually take our call, but we offer a transcript of a potential discussion between the Fed Chair and John Q. Public. It’s very insightful, so please read on.

The Problem with Investment Diversification

Every investment advisor and business student knows that portfolio diversification is key to wealth building. Show me an investor who can beat the S&P 500 Index by buying a few handpicked stocks and I will show you a hedge fund manager in the making. However, there is a huge problem with this strategy that no one is talking about.

Part 3: Analyzing Performance of Low-Income Oriented Retail Companies

We created an index for the financial performance of 5 low-income oriented retail companies to assess the health of this demo. While we recognize that these companies have benefited from the trade-down of higher-income consumers, things look reasonable at least through calendar 2Q23. 

Part 2: Incremental Interest Payments Squeeze Disposable Income

In this post, we quantify the pressure on disposable income driven by credit card & auto loan payment increases since the onset of the Fed rate hikes in early 2022 in addition to the impact of the coming resumption of student loan payments in October 2023.

Part 1: Keeping an Eye on the Consumer’s Top-Line

The consumer’s top-line benefits from a high employment rate, generous raises, and a healthy savings rate which indicates an income surplus.

Teenage Wasteland No More

The American youth (15 – 24-year-old) unemployment rate makes our country look downright productive compared to the rest of the world!

The Fight for Global Manufacturing Gets Personal

Post-covid U.S. exports of goods & services have skyrocketed as American companies have worked hard to onshore their supply chains, providing them with products to sell overseas. Correspondingly, U.S. imports from China have fallen considerably since late 2022 after China’s extended covid lockdowns left their American customers without product to sell.  

China’s Deflation Looks Pretty Good Compared to U.S. Inflation

While the U.S. has been suffering from severe post-covid inflation, China’s prices have been spiraling lower. What’s up with that?

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