This morning retail sales for April came in well below the forecast. The commerce department reported that retail sales were up a mere 0.1% in April; and if autos and gasoline are removed, there is 0.1% drop. Is this a surprise? Many economists and forecasters blamed the weather for the dismal first quarter. Granite Group has consistently said that it is not the weather.
The US economy is certainly doing better than the poor performance of the first quarter. This performance will probably be revised into negative territory when all is said and done. Granite Group still believes in a positive return in equities this year from earnings growth at the corporate level. While these are positive, we do not believe that the slow growth in the economy has been resolved.