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US Retail Sales Numbers Stink!
By Mike Conlon | January 14, 2010
From the “unexpected” category: US retail sales fell .3% in December, vs. analyst expectations that it would GAIN .5%. This is significant in that the December holiday season is one of the busiest times of the year and December is supposed to be a great month for sales. Holidays, end-of-year bargains, etc usually bring the shoppers out in droves. OUCH!
So what happened?
Well its clear that consumers are not confident in their own fiscal health which in turn affects their consumption patterns. With “official” unemployment figures at 10%– the reality is much higher and record housing defaults, its no wonder people are concerned. Not to mention the mounting debt the US is incurring that will have to be paid for at some time in the future. As tax receipts continue to decline, it won’t be long before everyone is called upon to “do their part”. Yep I’m talking about higher taxes.
So why is this disappointing figure so important? Well consumer spending in the US makes up close to 70% of US GDP!
Whoa. So if consumer spending is declining, foreclosures and unemployment are rising, it may be a VERY long time before we see an interest rate hike out of Bernanke and the Fed. And it looks like the markets have picked up on this, as the stock market has shook off this figure and has gone from an initial negative to positive. So that means the dollar is down against all but the Euro (see earlier post) as it is clear that the only thing driving world markets right now is the US zero interest rate policy (ZIRP).
So the risk-taking trade is on so far this morning. It will be interesting to see if stock investors come to their senses at all today– though I doubt that will happen in what’s become the bizarro world of investing!
Trade carefully!
To learn more about how these economic figures can have an impact on all markets, be sure to check out our forex trading courses!
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