Weekly Updates
Weekly Updates
- Consumer spending dominates economic activity, with government and corporate spending trailing far behind. Consumer spending covers a wide range of activities, from housing to having fun. But retail sales (buying goods in shops or online) remains a focus.
- Different economies put different things into retail sales figures. The US measures the value of sales and includes restaurant spending. German retail sales are a volume measure, excluding restaurants. These differences cannot account for the persistent bias. Put simply, German retail sales data is too pessimistic.
- Since January 2022, US retail sales numbers have been revised higher. Compared to the initial data release, the latest sales numbers are a cumulative 1.7% higher than was first reported. In Germany, however, the data has been revised higher almost 63% of the time. Almost a quarter of all negative numbers are transformed into positive numbers after revision. Cumulatively, German retail sales are 24.3% higher than first reported.
- Does this matter? In a world where sensationalism sells, and only fake news sells better than bad news, the media is likely to focus on the novelty of the latest numbers and stress the pessimism. Countries with bias to excessive pessimism in their initial reporting get a bad reputation, distorting investors’ perceptions in defiance of reality.
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