Friday, October 14, 2011

Economy: How The U.S. Consumers Save The World

This morning we got more encouraging data from the economic front. Retail sales rose last month 1,1%, excluding the volatile automobile sales they gained 0,6%. Both numbers were better than expected. In September retail sales were 7,9% higher compared to last year.

This is very good news for the economy. Retail sales are a large part of consumer spending, which creates around 70% of national income. Therefore retail sales are the engine of the whole economy and they overcome the problems in other parts of the U.S., such as the struggling financial sector. Yesterday JPMorgan Chase reported a loss in their investment banking division, but with the help of their solid growing consumer business the bank could still earn a profit. It looks like the consumers saved not only JPMorgan, they also saved the whole U.S. economy. As long as the consumer engine runs smoothly the U.S. will not fall in another recession.

This is good news for the global economy too. The U.S. is still the largest economy in the world and their imports generate a large part of the revenues of European & Asian companies like Mercedes, Adidas or Samsung. Therefore the sound U.S. retail sales are bolstering the economies of Europe & Asia. We could say that U.S. consumers save the world. Thank you!

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