US retail sales top views — economists react

The stronger-than-expected retail sales print arrives at a time when investors are increasingly concerned about the trajectory of the US economy.

fastFT has rounded up Wall Street’s reactions to the latest figures:

David Tulk, economist at TD Securities, said the data should prompt markets to rethink the health of the US economy:

The sparse data calendar this week likely exacerbated the significant amount of market turmoil as there was no counterpoint to growing fears that the US economy was either slipping towards or already in recession. With this data now in hand, the market has begun to reassess how far it had moved and the initial response has provided risk assets with a tentative boost.

Paul Ashworth, economist at Capital Economics, said the data aren’t strong enough to cause the Fed to increase interest rates in March:

This isn’t going to persuade the Fed to hike rates in March when the markets are still throwing a tantrum but, alongside the low level of initial jobless claims yesterday and the JOLTs data released earlier this week, it illustrates that US economic growth is actually accelerating.

Gus Faucher, an economist at PNC, said retail sales growth was “solid” last month, despite the turmoil on the financial markets:

Despite all of the turmoil in financial markets and growing chatter about recession, consumer spending, the economy’s backbone, continues to move higher. Sales growth in January was solid, especially after taking into account the big drop in gasoline prices over the month, and growth in December was revised up. The fundamentals for consumer spending are very good.

Peter Boockvar, chief market analyst at The Lindsey Group, reckons a pick-up in wage growth may have lured consumers into opening their wallets.

Bottom line, notwithstanding a pretty ugly month in the markets, the prospect of better wage growth seemed to help lift retail sales after a disappointing December.