Globalization: Consumers Of The World Unite

Europe is dragging the whole world down? We could get this impression if we believe the title lines in the media and the negative sentiment on the stock markets. But the economic reality is more complex and more bright.

Today we got news that the U.K. retail sales rose 0.6% M/M in October, well above a Bloomberg consensus forecast for a 0.2% decline (bloomberg). Food sales gained 0.6% in October from September, today’s data showed. Sales in the “other stores” category jumped 2.7%, led by computers and telecoms, sporting goods and toys, and jewelers. Excluding fuel, retail sales rose 0.6% on the month in October and were up 0.9% on the year.

In many other parts of the world the consumer spending also continues its solid growth. On Tuesday we got news that U.S. retail sales were up 0.5% from September to October (seasonally adjusted, after revisions), and sales were up 7.9% from October 2010. The U.S. consumer spending is supported by the strengthening job market  (weekly jobless claims fell on a 6 month low). On Monday we learned that the Russian retail sales jumped in October 9.2% from a year earlier. This is the biggest increase since October 2008. Last week China reported that there the retail sales grew 17%.

As long as the consumer spending, the engine of the economy, is doing well in many parts of the world, there is no risk of a global recession.