Love is in the Air, Just Not in the Mall

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According to the National Retail Federation, Valentine’s Day will add $20.7 billion of consumer spending to the U.S. economy in 2019. It looks like the economy is going to need it. Consumer spending drives 2/3 of the U.S. economy represented monthly by retail sales which has been a bright spot and with expectations for a positive December its drop of 1.2% was heartbreaking. To put in context, this -1.2% decline was the worst decline since September 2009, renewing economic worries. Although the reporting period was pre-government shutdown, it was amid a month of violent market swings which may have contributed to the consumers’ reluctance to spend. Fourth quarter U.S. GDP will not be released until February 28. It is expected to confirm a fourth quarter slowdown but is estimated to exhibit solid growth of about 2.7%. Meanwhile, the Eurozone’s GDP continued to disappoint, expanding only a mere .2% in Q4 and although China’s January trade data was much better than expected, it is not yet indicative of a sustained economic pick-up. As Q4 2018 earnings season winds down, economic data and the possibility of a U.S./China trade deal will remain front and center for investors.

Please review retail sales on page 12 of the Global Perspectives book.

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