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Friday, June 21, 2024

Retail Sales increase amid cautious FED stance

Key Takeaways:

  • Retail sales and jobless claims data released on March 14, 2024, indicate that the U.S. economy continues to expand at a solid pace.
  • Retail sales excluding gas and autos increased by 0.3% month-over-month in February, while overall retail sales grew by 0.6%. Year-over-year, retail sales rose by 1.5%, surpassing expectations.

The retail sales figures came in slightly better than expected, while the labor market remained resilient, with initial jobless claims and continuing claims both lower than anticipated.

The Data

Retail sales excluding gas and autos increased by 0.3% month-over-month in February, matching the consensus expectation and showing an improvement from the -0.8% decline in the previous month. Overall retail sales grew by 0.6% month-over-month, slightly below the consensus of 0.8% but still a recovery from the -1.1% drop in the prior month. Year-over-year, retail sales rose by 1.5%, surpassing the consensus estimate of 1% and the flat growth in the previous period.

The labor market also demonstrated ongoing strength, with initial jobless claims for the week ending March 9 coming in at 209,000, below the consensus of 218,000 and the previous week’s 210,000. Continuing jobless claims for the week ending March 2 were 1,811,000, lower than the consensus of 1,900,000 and the prior week’s 1,794,000. The four-week average of initial claims also declined to 208,000, down from 208,500 in the preceding week.

Federal Reserve

This data suggests that the U.S. economy continues to expand at a solid pace, with consumer spending showing resilience and the labor market remaining tight. However, as Federal Reserve Chair Jerome Powell noted in his recent testimony to Congress, inflation remains above the central bank’s 2% target, despite having eased over the past year.

The Federal Reserve is likely to maintain a cautious approach to monetary policy. The FOMC has kept the target range for the federal funds rate unchanged at 5-1/4 to 5-1/2 percent since July 2023, and Chair Powell has indicated that the Committee believes the policy rate is likely at its peak for this tightening cycle. However, he also emphasized that reducing policy restraint too soon or too much could result in a reversal of progress on inflation while acting too late or too little could weaken economic activity and employment.

The strong retail sales and steady labor market figures support the Fed’s current stance of maintaining policy rates at their present level until there is greater confidence that inflation is moving toward their 2% goal.

Lazarus
Lazarushttps://ljlnews.com
Publisher and editor of LJLNews. I am a Stock Market enthusiast, with an interest for politics. I hope you enjoy reading the articles! Contact me at: Lazaruslucas@ljlnews.com

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