ESTIMATED RETAIL SALES UNCHANGED – IS THE SAME TRUE FOR THE DECLINE IN THE VELOCITY OF MONEY? (Originally from 2015)

(I believe that the blog post below is from May 13, 2015.)



Earlier today, CNBC and others reported that estimated U.S. retail sales in April 2015 showed no change compared with March 2015, and this seemed to be a concern. However, the March estimates were revised upward slightly, and the April retail sales estimates without including automobiles and gasoline were up slightly. This is also after strong growth in March, but that growth followed consecutive quarters of decline.

As indicated in this blog, in my new book, and elsewhere, the huge drop in the velocity of money seems to be holding the recovery from the Great Recession back and has been a factor resulting in the Not-So-Great Recovery. My blog and my book emphasize that large increases in the money supply have, in my view, given the U.S. economy plenty of dollars, and that it is time for expansionary fiscal policy to ensure that dollars trade faster again.

Is the velocity of money in the U.S. still declining? If the money supply continues to grow rapidly while spending growth continues to be subdued, then the velocity of money will continue to fall, and the recovery will probably continue to be lackluster at best.