Chart of the week

On 14 February 2019, a month behind schedule because of the federal government shutdown, the Census Bureau published December’s US retail sales report. Markets were astonished as, instead of rising, headline retail sales fell 1.2% and the core retail sales figure, which strips out food services, cars, petrol and building materials and is considered to be a better trend indicator, plunged 1.7%. The falls are the steepest since December 2009 and September 2001.

OUR ANALYSIS

This spectacular fall in retail sales is certainly more to do with the combined effects of faltering stock markets in December and the 35-day partial shutdown than any real weakness in domestic demand, which is underpinned by resilient fundamentals. Job creations are robust, salaries are rising steadily, and both these factors should buoy consumption in the months ahead. However, while the fall needs to be put into perspective, it will weigh on US fourth-quarter growth, which is currently estimated at approximately 2%.

The opinion expressed above is dated February 14, 2019, and liable to change

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