Retail Sales vs. GDP

Retail sales were reported to be negative for the second month in a row in May.  The data was affected by falling gas prices: gas station sales were down 2.2%.  Still, there were other negative categories as well including building supplies and healthcare stores.

The implications of two months of declining retail sales is not good for 2Q GDP, but doesn't necessarily mean GDP will be negative.  Below is a comparison of quarterly GDP and retail sales since 1992.  Of the 15x that retail sales have been negative for a full quarter since 1992, GDP has been negative 6, or 40% of the time.