By Robert Johnson, CFA | Morningstar
The best news of the week came early with both the monthly retail sales report and the weekly International Council of Shopping Centers data showing important signs of improvement. The weekly report revealed an increase in the growth rate following three straight weeks of shrinking growth rates that were beginning to worry even me. Given that U.S. consumer spending is the key driver of the world economy right now, I was relieved by the step-up.
The enhanced retail sales number should help first-quarter gross domestic product growth, and some economists with gloomy 1% forecasts for the first quarter were forced back to the drawing board. On the negative side of the ledger consumer prices made a big jump, driven by higher gasoline prices. While the rise was as expected and the year-over-year averages were far less worrisome than the headlines featuring the large month-on-monthly jump, consumers are nevertheless fighting a losing battle with inflation in the short run. For now, inflation is not high enough to trigger another recession (anything above 4%) but not low enough to trigger a consumer spending boomlet. Offsetting the disappointing ...read more.
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