We were told by Keynesian economists that the sequestration voted by Congress and signed by the President in 2011 would cause great hardship on Americans. Well, so far, it hasn’t. The Department of Commerce reports on retail sales. They are up.
The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for July, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $424.5 billion, an increase of 0.2 percent (±0.5%) from the previous month, and 5.4 percent (±0.7%) above July 2012. Total sales for the May through July 2013 period were up 5.2 percent (±0.5%) from the same period a year ago. The May to June 2013 percent change was revised from +0.4 percent (±0.5%)* to +0.6 percent (±0.2%).
Retail trade sales were up 0.1 percent (±0.5%)* from June 2013 and 5.6 percent (±0.7%) above last year. Auto and other motor vehicle dealers were up 13.3 percent (±2.1%) from July 2012 and non-store retailers were up 8.8 percent (±2.1%) from last year.
It turns out that reducing the rate of growth of U.S. government spending has not produced a downturn. The rate of growth in the federal deficit has slowed a little, but the economy is still chugging along.
In fact, there has been no noticeable effect from the slowing in federal spending. We hear little about the supposed setback that sequestration was supposed to cause.
When the new fiscal year begins on October 1, there may be some politically painful cuts, assuming Congress does not roll over and raise the debt ceiling. But it probably will. There is no commitment in Congress to a real showdown over spending.
But it has been pleasant to see that the promised economic crisis that the sequestration was supposed to cause has not materialized.
Now, if we could just get the Federal Reserve to stop buying 75% of the Treasury Department’s deficit. . . .