Retail sales slumped for the second straight month in January, falling 0.8% vs. the previous month. The decline is well below the 0.5% drop anticipated in the consensus forecast (Econoday.com) and far worse than the slight gain that my econometric modeling implied. But the weakness in headline spending may have more bark than bite due to the ongoing tumble in the dollar value of gasoline sales. In fact, when you look at the year-over-year trend for retail sales ex-gasoline, consumption’s rate of increase continues to improve.
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In the search for timely signals about recession risk in the US, the quarterly GDP releases are of limited value. The data is published with a considerable lag, is subject to hefty revisions, and suffers from low frequency (quarterly rather than monthly). But not all corners of the GDP report are created equal for analyzing the business cycle. Indeed, when it comes to searching for clues about the state of the economy, gross private domestic investment tends to be more sensitive to the ebb and flow of the macro trend vs. headline GDP data or personal consumption expenditures (PCE).
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● Ceasefire agreed for eastern Ukraine after Minsk summit | Reuters
● I.M.F. Approves $17.5 Billion Bailout for Ukraine | NY Times
● Sweden Cuts Rate, Announces Bond-Buying Program | WSJ
● US mortgage applications begin Feb with a drop | FT
● Eurozone Industrial Output Remains Flat In December | RTT
● German inflation falls 0.4% in Jan, biggest drop since 2009 | Europe Online
● Bank of England inflation report: UK inflation rate will go negative | City AM