US Retail Sales
Retail sales rose 1.1% in February with the strongest performance in five months, easing concern that the January payroll tax hike might curb consumption in the first quarter. Economists had forecast a 0.5% increase and many now expect a large jump in GDP in the first quarter after the fourth quarter’s anemic 0.1%. January sales were revised to 0.2% from 0.1%.
Rising home price in many parts of the country, a good jobs report in February and a surging stock market are some of the reasons consumers may be more willing to spend despite only small increases in income. On the year retail sales were up 4.6%. Higher gasoline prices in February accounted for some of the increase, retail sales without automobiles and gasoline were 0.4% higher.
Consumers are also foregoing money in the bank in order to maintain spending. The saving rate in January fell by more than half to 2.4% from December's 6.4%. It has not been that low since averaging 2.4% in 200,7 the last year before the crash.
It is a question how far ahead of income consumption can run and for how long, but for the time being consumers seem willing to keep their credit cards handy and their worries in their back pockets.
Chief Market Strategist