JSW Corporation: US retail sales registered an encouraging increase in June as consumer activity ostensibly picked up in the spring.
According to the US Commerce Department, sales at retailers and within other consumer discretionary areas rose by 0.6% in June compared to expectations for a 0.1% increase and a solid improvement over the 0.2% gain in May.
Consumers began the year gingerly leading to the uninspiring annualized 1.1% US GDP growth in the first quarter. Elsewhere in the slew of data released at the tail end of last week was “good” news on inflation which rose 0.2% in June led by higher prices for housing, gasoline and healthcare. The rise was the fourth consecutive month in which prices have risen and the Consumer Prices Index (CPI) is currently above the 2% target set by the Federal Reserve.
“Inflation is markedly higher but the measure used by the Fed, the core CPI strips out food and energy costs remains below 2%,” explained Vivian Wang, Chief Economist at JSW Corporation.
“We doubt that US consumers will be pleased about having to pay more for life’s necessities but rising prices is what the Federal Reserve wants to create, “she added.
JSW Corporation says it doesn’t believe the Fed will take any action even if the core CPI rises above 2%. “We see the Fed choosing to ignore inflation above its 2% target because keeping momentum in the economy amid global risks from Brexit and a still-uncertain outlook for the Chinese economy is more important to them,” concluded Wang.

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