Strong Consumers – The US Retail Data
After uninspiring inflation data, there was extra confusion about the state of the economy. Fortunately, there was more economic data to be released by the United States government, including retail data which shows consumer strength. This week, we’ve discussed how consumer strength has been shown in our favorite days like the Big Game and Valentine’s Day, where record amounts of money have been spent, and that might have been foreshadowing in disguise.
Data from the Commerce Department showed that US retail spending saw a massive rebound in January, rising by 3 percent in what has been one of the largest monthly gains since 2021. This coincides with the overall slowdown in inflation we have seen in the past few months, allowing consumers to have a little bit of wiggle room. Notable figures include a 7.2 percent increase in spending at restaurants and bars, the largest increase since March of 2021, and mostly every category saw rises at different degrees. After a disappointing holiday season, consumers have spent a lot more after it looked like savings was the way to go. This figure is being reflected in the earnings reports of brands like Kraft Heinz and Mondelez, showing that consumers are becoming more comfortable with where prices are currently at despite them being higher than the historical number. As a result of the strong data, paired with an extremely powerful January jobs report, US first-quarter GDP estimates have increased to 2.4 percent according to the Federal Reserve Bank of Atlanta. The US economy shifts between strong and concerning every other day, and we’ll see where it comes out in the end.
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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.