Friday, November 14, 2014

Economy: In Consumers We Trust 2014

(Drivebycuriosity) - This morning we learned that US retail sales rose 0,3% in October, ex-gasoline sales they gained 0.5% (calculate). Consumers benefitted from falling gas prices at the pump which allowed them to spend more for other goods. Retail sales ex-gasoline increased by 5.1% on a YoY basis (4.1% for all retail sales).

The retail sales are a sign of the health of the US economy because they are driven by a growing job market (monthly more than 200.000 new US jobs have been created this year) and climbing stocks & home prices (wealth effect). The now dropping gas prices are generating additional tailwinds.

I reckon that climbing consumer spending in the coming months will drive the whole economy higher which should translate into further rising company earnings & profits. Thus the rally on the stock market should continue in spite of all the skeptical comments in the media.

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