Target serves as the nation’s sixth-largest retailer, with its strategy predicated on delivering a gratifying in-store shopping experience and a wide product assortment of trendy apparel, home goods, and household essentials at competitive prices. Target’s upscale and stylish image began to carry national merit in the 1990s—a decade in which the brand saw its top line grow threefold to almost $30 billion—and has since cemented itself as a leading US retailer. Today, Target operates over 1,950 stores in the United States, generates over $100 billion in sales, and fulfills over 2 billion customer orders annually. The firm’s vast physical footprint is typically concentrated in urban and suburban markets as the firm seeks to attract a more affluent consumer base.

This morning's release from the Bureau of Economic Analysis (BEA) will be the third, and final, update of 1Q GDP. The update last month indicated 1Q real GDP rose at an annualized 1.3% pace, down from 3.4% growth in 4Q23. The all-important consumer economy is "mixed," but is still driving GDP. Consumer spending, designated as Personal Consumption Expenditures (PCE) in the GDP report, contributed 1.34 percentage points of the 1.3% growth in 1Q (offset by lower inventory investment, the trade deficit, and a surprising decline in spending by the federal government). We don't expect a major revision to GDP this morning. Between 1996 and 2022, the average absolute revision to the quarterly percentage change in real GDP was just 30 basis points, according to the BEA. PCE grew 2.0%, but the consumer category was carried by the huge services component, which was up an impressive 3.9% after 3.4% growth in 4Q23. Consumer spending on goods declined 1.9%, which should worry the U.S. Federal Reserve. Within goods, nondurables were down 0.6% and durables were down 4.1%. Residential fixed investment rose 15.4% in 1Q and contributed 57 basis points to 1Q GDP growth. On July 25, the BEA will release its advance estimate for 2Q GDP. We expect 2Q24 growth of 1.9%. The June 20 GDPNow forecast for 2Q24 from the Atlanta Fed is 3.0%, with an estimate for 2.5% growth in PCE. Intellectual property could make another strong contribution to quarterly GDP according to the Nowcast. Residential fixed investment is likely to be weaker in 2Q and may be a drag on GDP. For the remainder of 2024, we expect GDP growth of 1.8% in 3Q, and 2.0% in 4Q. Our full year 2024 estimate is 1.7%. Our 2025 estimate is also 2.0%. Federal Reserve board members and bank presidents expect GDP to grow 2.1% in 2024, 2.0% in 2025, 2.0% in 2026, and 1.8% in the "longer run," based on the median projections provided at their June meeting.

Target serves as the nation’s sixth-largest retailer, with its strategy predicated on delivering a gratifying in-store shopping experience and a wide product assortment of trendy apparel, home goods, and household essentials at competitive prices. Target’s upscale and stylish image began to carry national merit in the 1990s—a decade in which the brand saw its top line grow threefold to almost $30 billion—and has since cemented itself as a leading US retailer. Today, Target operates over 1,950 stores in the United States, generates over $100 billion in sales, and fulfills over 2 billion customer orders annually. The firm’s vast physical footprint is typically concentrated in urban and suburban markets as the firm seeks to attract a more affluent consumer base.

On Friday, the Bureau of Labor Statistics (BLS) likely will provide more evidence that the U.S. job market is healthy but cooling. The Street should be happy if the May unemployment rate stays close to April's 3.9% and payrolls remain slightly below 200,000. Signs of increasing recession risk or reaccelerating wage pressure would roil the markets -- but we don't see evidence of that in the wide range of employment indicators we follow. Jobless claims are the first place we'd look for signs of a serious slowdown. Recent readings look healthy. The four-week average, which smooths the week-to-week volatility, has risen from about 200,000 at the beginning of the year to 222,500. But that is still well below the critical 300,000 that would raise recession flags. Layoffs and discharges from the Job Openings and Labor Turnover Survey (JOLTS) likewise remained low. Many companies have seen how hard it can be to find qualified staff. That said, there also isn't evidence of surging demand for labor. Average weekly hours is an important leading indicator. If companies see an uptick in demand, it is logical they will boost the hours of existing employees before they contract new ones. Likewise, they may turn to temporary help services. Both of those indicators from the BLS are trending lower. On a more anecdotal level, the Federal Reserve's Beige Book, which is a survey of economic conditions that is released before Federal Open Market Committee meetings, concluded that employment rose at a slight pace overall, with evidence of better labor availability, mixed hiring plans, and wage growth moderating towards pre-pandemic historical averages. We expect Friday's employment report to show that May payroll growth moderated to a still-healthy 168,000, from 175,000 in April. We expect that unemployment remained at 3.9%, growth in average hourly earnings remained at 3.9%, and average hours worked stayed at 34.3.