Following disappointing readings in December and January, February’s retail sales report offered some reassurance. It was the strongest reading since July, while core retail sales and control group sales, the portion that feeds into GDP, also came in ahead of economists’ expectations, observes Bret Kenwell, US investment analyst at eToro US.
There have been growing concerns about the state of the US consumer, particularly after February’s disappointing jobs data and lackluster consumer confidence readings. But if consumers continue to show resilience, it could help keep the economy on a constructive path.
Retail Sales (% Change)
Source: Trading Economics
Still, investors should be careful not to make too much of one report. Today’s retail sales figures are a step in the right direction, but we need to see that strength reinforced by other data. In other words, this is a positive development — not necessarily a turning point.
For investors, economic data has been mixed for the past few months. What investors need to see now is confirmation from Corporate America.
There has been a disconnect between fundamentals and price action, with stocks moving lower even as earnings estimates continue to move higher. Earnings season will likely prove one of those trends wrong — and bulls are hoping it’s the price action, not the estimates.
