Union International: The third consecutive monthly fall in US retail sales is, yet again, being blamed on the weather.
Union International: Retail sales in the US “unexpectedly” fell for the third month in a row in February with the Commerce Department saying they dropped 0.6% against analysts’ expectations for a 0.3% increase.
The fall followed last month’s 0.8% decline and adds weight to suspicions among some commentators that the US economic recovery is not as robust as the still-encouraging employment data would suggest.
“Nearly every measure used to gauge the state of the economy is saying, very clearly, that all is not well. What makes the retail sales number all the more damning is the fact that it comes as American consumers are paying far, far less for fuel and should have more disposable income,” explained Solomon Roth, chief economist at Union International.
With most focused on the better-than-expected jobs number earlier this month, expectations for a Fed rate hike in June or July have become more prevalent but Roth disagrees.
“The US dollar is strong and the threat of deflation features quite prominently in thinking over at the Federal Reserve. They’ll almost certainly be worried about the impact on the country’s exports especially when Japan and Europe are busy weakening their currencies to gain competitive advantage,” he said.
Union International said it expects the Fed to postpone a rate increase and cautions that further deterioration in the outlook for retail sales could increase calls for the central bank to take further action with more monetary stimulus.
“The fact is we should be seeing much more robustness in consumer spending side of things given all the money people are saving at the pump,” concluded Roth.
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