Ulrich Leuchtmann, head of foreign exchange and commodity research at Commerzbank, said American consumers are proving to be true shopaholics.
Retail sales increased 1% versus 0.4% expected
“Retail sales rose 1% in July, as released by the Census Bureau yesterday; analysts had been expecting a slight 0.4% increase. A notable subcomponent also came in well above analyst expectations. And since it’s now axiomatic that the American consumer is the ‘driver of the U.S. economy,’ the retail sales figure at least helped to dispel some of the weakness in the U.S. dollar of the past few days.”
“We do not believe the US economy is in recession. Therefore, our view is that the market reaction was not wrong. However, we would like to point out that yesterday’s numbers do not prove one view of the US economy one way or the other. If a recession were to come, the US labor market would undoubtedly be damaged with a lag, and US consumers would usually only notice it then.”
“Remember Tom and Jerry? In the cartoon, you often see Tom the cat running down a cliff, running in the air for a while, and then crashing even harder. If the US economy is going to be in recession in the near future, I believe there is a good chance that US retail sales will follow suit. So yesterday’s strong numbers are not complete evidence that the US economy will be strong in the near future, but they are a necessary prerequisite for this view.”
