Lot of good and bad in the economy this week. What cracks first?

The recent moves in the stock market match a lot of other messages we’ve been seeing in the overall economy.

Some of this is due to concerns over Trump Tariffs ( here they come! Oh wait, now they’re gone! Or we’ll wait and see!) But I’ll step aside on that, as the real economy is also showing a number of contradictions.

One side - Things are good in the economy. Here’s an example from housing, which had seemed wobbly at the end of 2018 and the start of 2019.

Privately‐owned housing starts in April were at a seasonally adjusted annual rate of 1,235,000. This is 5.7 percent (±13.0 percent)* above the revised March estimate of 1,168,000, but is 2.5 percent (±10.4 percent)* below the April 2018 rate of 1,267,000. Single‐family housing starts in April were at a rate of 854,000; this is 6.2 percent (±13.7 percent)* above the revised March figure of 804,000. The April rate for units in buildings with five units or more was 359,000.

And after some leveling off, manufacturers ended the 1st quarter in 2019 with an uptick in growth.

The combined value of distributive trade sales and manufacturers’ shipments for March, adjusted for seasonal and trading day differences but not for price changes, was estimated at $1,470.1 billion, up 1.6 percent (±0.2 percent) from February 2019 and was up 3.7 percent (±0.3 percent) from March 2018.

And then we found out on Friday that American consumers were feeling great about the economy and its outlook.

The numbers: The University of Michigan’s consumer sentiment index in Mayclimbed to a reading of 102.4, a 15-year high, from April’s reading of 97.2.

Economists polled by MarketWatch expected a reading of 97.1.

What happened: The index for consumer expectations shot higher, rising to 96 from 87.4 in April. That’s the biggest jump in expectations since December 2011.

Granted that survey took place before this week’s tariff concerns and stock market volatility happened, but all of those signs point to an economy in great shape. Except….

Other side- The economy is stalling out
If consumers are so confident, why did retail sales suck in April?

Advance estimates of U.S. retail and food services sales for April 2019, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $513.4 billion, a decrease of 0.2 percent (±0.5 percent)* from the previous month, but 3.1 percent (±0.7 percent) above April 2018. Total sales for the February 2019 through April 2019 period were up 3.0 percent (±0.7 percent) from the same period a year ago. The February 2019 to March 2019 percent change was revised from up 1.6 percent (±0.5 percent) to up 1.7 percent (±0.2 percent).

Retail trade sales were down 0.2 percent (±0.5 percent)* from March 2019, but 2.8 percent (±0.5 percent) above last year. Nonstore retailers were up 9.0 percent (±1.2 percent) from April 2018, while sporting goods, hobby, musical instrument, and book stores were down 8.5 percent (±2.6 percent) from last year.

And if you take out the impact of rising gas prices, all other sales were down 0.4%.

Note that retail sales are not adjusted for inflation, which means that a 2.8% increase in sales in the last 12 months isn’t much when prices have gone up 2% in the same time period. Wages also flatlined in April, which is what a booming economy would be doing.

Real average hourly earnings for all employees decreased 0.1 percent from March to April, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This result stems from a 0.2-percent increase in average hourly earnings combined with a 0.3-percent increase in the Consumer Price Index for All Urban Consumers (CPI-U).

Real average weekly earnings decreased 0.4 percent over the month due to the change in real average hourly earnings combined with a 0.3-percent decrease in the average workweek.

That was the second straight monthly decline in average hourly earnings, and it's caused a bit of narrowing in the last couple of months between wage and price growth.

And lastly, less was being pumped out of American factories in April, which is often a harbinger of bad things in other parts of our economy.

U.S. industrial production fell in April, dragged by a big drop in factory output as production of autos and auto parts continued to slide.

The Federal Reserve says industrial output — reflecting total production at factories, utilities and mines — dropped 0.5% in April after a 0.2% March gain. Industrial production fell 0.5% in February.

Manufacturing output fell 0.5%, led by a 2.6% decline in motor vehicles and parts, which has fallen in three of the past four months.

And auto sales were an especially bad part of the decline in the retail report, as it declined by 1.1% last month.

So lots of cross-currents for the economy right now. Just when you think things are dying, a good consumer confidence or housing starts report crops up. Then when you think the 3.2% growth in Q1 might continue, you see retail sales and industrial output go down.

As I’ve said a lot recently, it doesn’t seem like the current economy can keep going in such a split personality. And what direction it does take in the next few months likely helps to determine the chances of both parties in 2020 (beyond the wild card of Trump idiocy, of course).