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January Retail Sales Jump

February 25, 2023 by Paul Myers, Myers Capital Management

Are we in a recession at this time? Some think we may be, but the January retail sales numbers that were recently released may point a different direction. In their Weekly Market Recap JP Morgan, one of the Portfolio Strategists we utilize for client accounts, wrote this about January’s retail sales and what this may indicate.

U.S. retail sales rebounded sharply in January, exceeding expectations, and signaling that the American consumer continues to spend. After consecutive months of decline into the end of 2022, nominal retail sales jumped by 3% month over month in January. Although seasonal factors and the largest cost-of-living adjustment to Social Security since 1981 may have played a role in this surge, the increase in sales was broad-based, as shown in the chart of the week. Vehicle sales were the largest contributor to growth, and food services – a proxy for services spending — rose by 7.2%, the most since March 2021. With growth better than expected and inflation proving to be sticky, markets have gravitated toward a new narrative of “no landing.”

The retail sales report is important for assessing the state of the consumer, which matters because consumption is nearly 70% of GDP. However, the sustainability of this spending should be assessed in light of a declining household savings rate and climbing credit card balances.

At the beginning of February, the market had priced a terminal federal funds rate below the Federal Open Market Committee (FOMC) projection; however, in the wake of strong jobs, inflation and retail sales reports, markets quickly repriced the terminal rate more in line with the median projection. While it is good to see market and Fed expectations better aligned, stronger economic growth suggests that it may take longer for inflation to come back to levels that are consistent with the FOMC’s mandate.

Filed Under: Myers Cap Post

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The Myers Cap Post

  • Leading Economic Index Again Declines in February
  • Fed Decision And The Banking Crisis
  • Fed Raises Interest Rates Again Today
  • Inflation Lower In February
  • Banking Crisis Averted, But Risks Remain
  • February Unemployment Report and Inflation
  • February Suggests We May Not Be In A Recession Yet
  • January Retail Sales Jump
  • Recession… Is It Coming Or Here Already?
  • Opportunity in Growth, Value, or Both?
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Myers Capital Management, Inc. (“MCMI”) is a registered investment adviser located in Abington, PA. MCMI’s website is limited to disseminating general information about its advisory services and access to additional investment-related information, publications, and links. Accordingly, the publication of MCMI’s website on the Internet should not be construed by any consumer or prospective client as MCMI’s general solicitation to effect or attempt to effect transactions in securities or the rendering of personalized investment advice for compensation. We do not collect personally identifiable information about you when you visit our website unless you voluntarily provide it by sending us an email or other electronic communication(s). If you choose to share with us personal information, we will retain it in our electronic communications archive. Any subsequent, direct communication by MCMI with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. MCMI does not take any responsibility, representations, or warranties regarding the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, including website links. All such information is provided solely for convenience, guidance, and informational purposes only, and all users should be guided accordingly. Investments involve risk and, unless otherwise stated, are not guaranteed. This website and information are not intended to provide investment, tax, or legal advice and no warranties are implied. Before implementing any strategy, consult with a qualified financial adviser and/or tax professional. Insurance products and services are offered and sold through Myers Capital Management, Inc., and individually licensed and appointed insurance agents. For information about MCMI, please refer to the SEC’s investment adviser public information website at www.adviserinfo.sec.gov or upon written request from Myers Capital Management, Inc. No product or service is offered or will be sold in any jurisdiction in which such offer or solicitation, purchase, or sale would be unlawful under the securities laws of such jurisdiction. This web site is intended to be made available only to individuals in the United States, and the information on the web site is only for such persons. • Copyright Myers Capital Management, Inc.
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