Last week’s retail sales print came in at +3.0% YoY — still in positive territory, but notably trending lower for the first time since mid-2023.
Retail sales are one of the broadest and earliest reads on consumer behavior — and since consumption makes up the majority of U.S. economic activity, a trend shift here is worth a look.
What historically works when retail sales are positive but falling?
The chart below looks at forward 12-month returns by asset class during similar regimes.
Two asset classes stand out:
U.S. Growth Stocks
- Strongest forward and risk-adjusted returns
- Less reliant on cyclical spending; driven by innovation and secular trends
- Falling retail sales can help ease inflation fears, benefiting longer-duration growth names
Commodities
- Historically underperform in this setup
- Weaker demand growth, waning inflation pressure, and a stronger U.S. Dollar create headwinds
While no single macro signal should drive trades, economic regime shifts like this can guide policy, positioning, and expectations.
