Retail sales rose 0.3% in January, matching estimates, data out Friday showed.
Although the incoming data has taken a backseat lately due to the Fed’s express intent to remain on hold and uncertainty surrounding the eventual impact of the coronavirus on the global economy, investors are still keen on tracking the mood of the US consumer.
While the headline for January met expectations, December’s print was revised lower to a 0.2% gain.
The control group was unchanged MoM in January and the ex-autos print was also an in-line 0.3%.
The flat reading on the control group isn’t the best news. The market was looking for a 0.3% rise, so unchanged is a big miss.
Perhaps more concerning is that it comes against record high confidence, record low unemployment and record high stocks. Something doesn’t add up there, and the problem is that the US economy is now leaning almost entirely on the consumer.
The advance read on Q4 GDP showed business spending declined for a third straight quarter, and consumption, while still strong, slowed sharply.
“Looking a little further ahead, the chief concern is whether coronavirus fears become more apparent within the US”, ING said, in an instant reaction to the data. “So far the number of cases are tiny and the biggest disruption is to manufacturing supply chains, but the longer it remains in the headlines, the greater the chance it starts to impact consumer behavior”.
We’ll see. The White House continues to parrot the “middle class miracle” narrative. The new catchphrase for the election year is apparently “blue collar boom”. That entire story will be unmasked as dubious if the consumer stops showing up for Trump.
But let’s not get ahead of ourselves. This is one print and, my own political leanings aside, the US economy is reasonably strong, although as I never tire of reminding readers, the president’s pretensions to having ushered in a veritable “renaissance” are objectively absurd…