04 Aug June 19, 2020
Retail Sales
Retail sales rose 17.7% in May.
Our Take: The economy started to reopen and the spending followed. Economists had expected a surge in sales, but not to the extent experienced. The strength in May is clearly welcome news, but retail sales remain over 8% below their January peak. There is still a long road to recovery ahead.
China
Reports came out that China will accelerate its purchases of U.S. agricultural products, mostly soybeans, following a ministerial-level meeting in Hawaii this week. This move would move China closer to compliance with the Phase 1 trade agreement signed earlier this year. The COVID-19 pandemic and increased U.S.-China tensions had slowed China’s purchases to a rate that would not allow China to meet its targets.
Our Take: Reducing trade tensions between the world’s two largest economies is a positive development. The U.S. and China still have much to resolve in both the trade and geopolitical arenas, and conflicts in these areas cast a shadow over economic growth.
Municipals
Florida Governor Ron DeSantis announced that he expects to make budget cuts by vetoing certain parts of the state budget. Florida lawmakers passed the proposed spending plan in March, due to take effect on July 1. Since then, the coronavirus shutdown and tourism slowdown occurred, leading to lower-than-expected tax revenue.
Our Take: Governor DeSantis has the authority to use a line item veto to make changes to the proposed state budget. Florida is dependent on sales tax revenue, which has declined significantly. Without the expected tax collections, a decrease in state spending is necessary. Residents will be watching closely to see which parts of the spending proposal will be changed.
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