US retail sales due at 12.30 GMT
It's great to be in America isn't It? Jobs growth is good, wages are rising, life couldn't be better could it?
It can always be better if you're on Main St. One big aspect of any economy is the spending levels of its citizens. It's the essence of any economy for people to earn and spend. For the US it's the final piece of the jigsaw to getting the economy back on it's feet and it's a very big piece indeed.
Unfortunately is been lacking somewhat of late. Like a lot of US data it's been on the slide since mid to late 2014
US retail sales ex-autos y/y
Like durable goods, which is also a gauge of wholesale consumer activity we've had good months and bad months but nothing that says the US spending is robust. While job gains continue spending will catch up at some point. The problem for the US is that there are still high levels of household debt and money is being used to reduce that rather than a trip to the shops. That's a good thing for the economy in the long term but not for the here and now. Until we see a sustained trend in retail sales this is one area that is a cloud hanging over the economy and the Fed
For today, expectations are for a 1.1% m/m rise in the headline number, +0.7% m/m ex-autos and 0.5% m/m for the control group. That may seem a pretty hefty move against last month but retail sales can be very volatile.
It's going to be a report the bulls watch carefully as they're trying to get the rally back on track. Anything around or above expectations will push the buck higher. If any of the main components comes in near flat or with a minus sign then we could see another quick hard drop as there's is added pressure on these numbers with the FOMC next week
Retail sales is not one I really like trading because of the volatility. The rest of the market will though so take a bit of care when the numbers come out
