Yesterday’s numbers on economic activity in the retail and industrial sectors is a tale of two trends through January. Consumer spending accelerated to the fastest annual pace in five years while industrial production was flat vs. the year-earlier level. Given the greater influence of consumption for the US economy, the retail data will probably have more sway at the Federal Reserve, which remains on track to continue raising interest rates this year. Another factor that suggests the central bank will continue to tighten policy: consumer inflation at the headline level in January increased to the highest year-over-year rate since 2012.
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