The monthly rate of retail sales in the US for June will be announced at 20:30 on Friday. pursuantBank of America(BAC) An aggregation of credit and debit card data, US consumption hit the brakes after strong growth in June. In the seven-day period ending July 10, total consumption increased 13% from the same period two years ago and 12% from the same period a year ago. This will be the slowest annual growth rate since the outbreak of COVID-19.

Consumption has clearly slowed compared to the previous week.

Here's evidence of a slowdown in spending across all major categories: The following chart shows that spending has declined, whether it's credit or debit cards, physical stores, or e-commerce.

1. The US Independence Day holiday is from July 4 to 6 this year, but consumption growth is only comparable to July 7 to 9 last year (the US was experiencing a blockade during this period last year). This is a significant drag on debit and credit card spending, particularly on specific categories such as home improvement and groceries.

2. Online consumption is weak. The two-year growth rate of online consumption fell to 60% from nearly 90% last week. In contrast, the two-year growth rate of retail spending in physical stores has been hovering around 10%. One possible reason is that this year's “Golden Day” (AmazonsPrime Day (equivalent to Double Eleven hosted by a domestic treasure) was held in June, and 2019 was in mid-July, so it is possible that some expenses were overdrawn early.

3. Unemployment insurance expires. Beginning with the week of June 12, states withdrew early from the federal unemployment insurance program. Some states have eliminated an additional $300 in weekly unemployment benefits, some have eliminated benefits for the long-term unemployed, and others have offered “return to work” bonuses in place of benefits. These factors complicated the analysis, but Bank of America compared the total consumption of states that had withdrawn from plans and retention plans and indexed it with the May average. The former only spent slightly less than the latter, but only during the most recent week.

As can be seen from the chart above, spending in states that accept unemployment insurance benefits is also gradually declining. It can be seen from this that the cancellation of unemployment insurance benefits may discourage consumption, but the impact will not be significant.

According to the summary of BAC credit and debit card data, in the seven-day period ending July 3, total consumption increased 23% from the same period two years ago and 19% from the same period a year ago. Looking at June alone, retail sales excluding automobiles increased 0.4% month-on-month after seasonal adjustments.

Note that monthly data highlights a shift in commodity spending to service spending. Bank of America's durable goods spending (furniture, electronics, and construction materials) contributed negative monthly to total debit and credit card spending over the past 3 months, while service spending (restaurants, airlines, and lodging) contributed significantly throughout the year.

Seen from this perspective, the increase in service spending over the past three months is equivalent to three times the reduction in spending on durable goods. More frequent weekly data show that this situation continued until July, the most notable being travel-related expenses throughout early summer.

So what does this mean for the retail sales data released tonight?

According to Bank of America, even before consumption slowed in July, economic growth in June was disappointing. Tonight's monthly retail sales rate will be -0.2%, which set off the market, lower than the general forecast of 0.0%. Retail sales data excluding automobiles will reach 0.4%, slightly better than the commonly expected 0.3%, and the core retail sales monthly rate will fall slightly below the expected value of 0.3%, or record 0.2%.

It's worth noting that over the past four months, Bank of America was perfect in predicting actual retail sales using a summary of credit and debit card data, while Wall Street's predictions in recent months were grossly wrong.

Bank of America said that if July consumption continues to weaken, we will see some very disappointing retail data in the coming months.