Economy: In Consumers We Trust 2013 II

Tax rise? What tax rise? The US consumer didn´t respond much to this year´s tax hikes. In January the US retail sales grew 0.1% (ex-Auto sales 0.2%  calculatedriskblog). Yes, this was a bit slower than in December (plus 0.5), but the numbers are always fluctuating, as every living organism. Compared to January 2012 sales were up 4.7%. The Blog CalculatedRisk reports further that "retail sales are up 25.7% from the bottom, and now 9.9% above the pre-recession peak" (calculatedriskblog).

The advancing retail sales are driven by 3 engines: Rising stock markets (fueled by climbing company profits), a healing job market (partly fueled by growing exports) and a recovering home market (rising house prices and sales fueled by a stronger economy). All these trends are raising the wealth of the consumers, allowing them to improve their life standard by spending more money. Maybe some of the retailers, for instance American Apparel, also benefitted from their sexy offerings and marketing campaigns.

I reckon that this comfortable constellation will continue in the coming months. The raising retail should lift the company profits further which will translate into higher incomes and more consumer spending - a virtuous circle.