US retail sales rose by 0.4% in December, a report that some economists say could bolster fourth quarter GDP (gross domestic product) growth despite falling shy of estimates of 0.6%. The control group for retail sales actually topped estimates and pushed the figure higher by 0.7% month-over-month.
Interactive Brokers Senior Economist José Torres joins Julie Hyman and Josh Lipton for a deeper conversation on the data print.
“Consumers were managing pressures by spending a lot one month, only to retreat the next. But we’ve seen from the four months ending in December that we’ve had strong growth trending higher,” Torres says. “Like you said, control group robust coming in stronger than expected; the control group essentially removes some of those more volatile elements like cars, fuel, building materials, etc., and is more of a direct link to GDP.”
Torres attributes the headline and core inflation readings from December’s Consumer Price Index (CPI) to volatile energy costs and cooling prices in shelter and inflation
“However, what’s the uncertainty? The uncertainty is the Trump administration has an adversarial trade posture. So that can really threaten goods re-inflation; goods really drove the disinflation train from 2022. And we saw those high numbers in the eights and nines down to the two [percent] handle that we see today. So if goods start to reinflate we have some significant issues,” Torres tells Yahoo Finance.
“Also on the labor front, there are some immigration risk,” the economist adds.
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This post was written by Luke Carberry Mogan.
