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US Retail Sales Rose in Dec 2023

Holiday Shopping Spree Continues: American consumers continued their spending spree over the recent holidays. US Retail data reveals that retail sales rose by 0.6% in December, doubling the 0.3% pace recorded in November. Notably, November’s growth rate remained unrevised.

Holiday Shopping Spree Continues: American consumers continued their spending spree over the recent holidays. The latest US Retail data reveals that retail sales rose by 0.6% in December, doubling the 0.3% pace recorded in November. Notably, November’s growth rate remained unrevised.

Jamie Cox, managing partner for Harris Financial Group, noted that consumers “bought everything in sight over Christmas.” This robust consumer activity also provided the Federal Reserve with more leeway to maintain higher interest rates for a longer period.

Core Retail Sales Surge: Diane Swonk, KPMG’s chief economist, highlighted that core retail sales, which contribute to the calculation of real GDP growth, surged by 0.8% in December. This indicates a consumer spending growth of around 2.7% in the fourth quarter. The official preliminary estimate of fourth-quarter real GDP growth is expected next Thursday.

Swonk added, “That sets us up for a strong first quarter and suggests the consumer is still alive and well.” This aligns with the narrative that has been emphasized for months: don’t bet against the U.S. consumer.

Inflation and Wage Growth: Even as the years-long pandemic spending boom may be in the rearview mirror, many Americans are still holding it together. This resilience is particularly notable as inflation moderates and wage growth remains above-trend.

Spending Normalization: Like most economic data these days, spending is on a normalizing path. For instance, sales at restaurants and bars were flat in December, suggesting that tradeoffs are happening in household budgets says Sarah of ReelShares.

Impact on Stock Market: Today’s retail sales report underscores that we’re still in the “good news is bad news” cycle where strong economic data sends stocks falling. That’s because resilient data like December’s sales growth makes it more likely Federal Reserve officials will move cautiously, keeping interest rates higher for longer.

The odds of the Fed implementing a rate cut in March dropped to 52% this afternoon, down from 63% yesterday, according to the latest data. Following the release of the retail data, stock futures extended their declines. The S&P 500 and Nasdaq Composite finished the day down 0.6%, while the Dow Jones Industrial Average slid 94 points, or 0.3%.

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