A “blowout” March retail sales report sparked a sell-off in US government debt and shook global currency markets on Monday, in the latest sign that the world’s largest economy may be running too hot to justify cutting interest rates.
Rising inflation in March didn’t deter consumers, who continued shopping at a more rapid pace than anticipated, the Commerce Department reported Monday.
Retail sales increased 0.7% for the month, considerably faster than the Dow Jones consensus forecast for a 0.3% rise though below the upwardly revised 0.9% in February, according to Census Bureau data that is adjusted for seasonality but not for inflation.
The consumer price index increased 0.4% in March, the Labor Department reported last week in data that also was higher than the Wall Street outlook. That means consumers more than kept up with the pace of inflation, which ran at a 3.5% annual rate for the month, below the 4% retail sales increase.
Excluding auto-related receipts, retail sales jumped 1.1%, also well ahead of the estimate for a 0.5% advance. The core control group, which strips out several volatile measures and is in the formula to determine gross domestic product, also increased 1.1%
A rise in gas prices helped push the headline retail sales number higher, with sales up 2.1% on the month at service stations. However, the biggest growth area for the month was online sales, up 2.7%, while miscellaneous retailers saw an increase of 2.1%.
Multiple categories did report declines in sales for the month: Sporting goods, hobbies, musical instruments and books posted a 1.8% decrease, while clothing stores were off 1.6%, and electronics and appliances saw a 1.2% drop.
Stock market futures added to gains following the report, while Treasury yields also pushed sharply higher. The upbeat outlook for the Wall Street open came despite an escalation over the weekend in Middle East tensions as Iran launched aerial strikes on Israel. Stocks surrendered gains later in the session as yields surged.
All that money printing since 2008, doubled down on after 2020, has long lasting effects on the economy - who would have guessed?
@R3volutionSnailDemocrat2wks2W
You mean in terms of strong growth, low unemployment, and falling inflation? Who would have guessed indeed!
Strong "growth" and low unemployment is requiring the US government to borrow 1 Trillion dollars every four months. It won't be long before the US is unable to afford to pay interest on its gigantic debt, which is why Powell is desperate to cut interest rates. Clearly a gigantic crash is baked in. And you're wrong, inflation isn't low.
@BoredRoadrunnerMountain2wks2W
Wealthy people save money, not spend it. That's why all that paper money from QE infinity didn't blow up the "real economy" (despite inflating an incredible asset bubble). But give away money to people who live hand to mouth and they spend every dollar on consumables and the general price level goes nuts.
Hard to have inflation drop when Federal deficit is 7% of GDP
@Unanim0usXerusSocialist2wks2W
Walk me through the mechanics as to how that deficit gets to the consumer's pocket and shows up in retail sales. Well, I guess those unfunded tax cuts in 2018 did run up the deficit and put money in the pockets of the already wealthy.
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