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Is the US consumer really down?

| Posted by: Paul Donovan | Tags: Paul Donovan

  • The release yesterday of weaker US retail sales caused a brief moment of consternation for financial markets - price action and weather being dragged out as reasons. The basic point, however, is that this weakness is not echoed in data elsewhere - either in US data or in the data of exporters to the US.
  • Consumer sentiment is due in the US today, and expected to moderate a bit as consumers overreact (as ever) to shifts in the oil price. It is price changes not price levels that seem to motivate sentiment. Producer price inflation should be buoyed by the oil price this month.
  • Italy releases final consumer price data, which is expected to be negative again. However this is not deflation, as it represents a relative price decline, and with Euro area growth expected to do better than consensus this year there may be positive inflation surprises too.
  • Currency markets will continue to provide some entertainment for other markets, no doubt. Bank of England governor Carney was commenting on the impact of external factors on UK inflation yesterday in a modestly dovish way, though his colleagues at the Bank seem more inclined to view these forces as stimulatory.