Economy: The Magic Of Optimism

Tax rise? Looming public spending cuts? The U.S. consumers don´t care. This morning we got news that the U.S. retail sales jumped 1.1% in February (bloomberg). Sales were up 4.6% from February 2012 (calculatedriskblog). That is a sign that the engine of the economy,  consumer spending, is still going strong instead of the headwinds from the U.S. government and the recession in Europe.

The strong retail sales aren`t a surprise. As described in my post from last Sunday (Power To The People drivebycuriosity)  climbing consumer spending is powered by the recovering job market that creates more incomes to spend. The falling jobless rate and lower weekly jobless claims which are both signs for a better job security are helpful. The retail sales are also fueled by strong wealth effects from continuous gains on the stock market and rising home prices.

And there is another force: The optimism of the U.S. consumers. It seems that the Americans believe in a positive future and stay confident instead of all the fear mongering in the media.  There is no reason that this confidence should disappear any time soon. Therefore the retail sales should climb higher in the months to come and will fuel the continuation of the economic upswing in the U.S.

Strong U.S. retail sales also are boon for the global economy because they translate into solid exports for European & Asian companies like Adidas, Volkswagen & Samsung.