Should German statisticians cheer up?

Weekly Updates

The outlook for the US consumer is plagued by uncertainty. US President Trump’s trade taxes are likely to convert rising real incomes into falling real incomes. Indeed, if Trump really believes balanced trade is important, a weaker US consumer is necessary.
Investors must seek alternative sources of consumer demand. China is large, but its level of economic development means its consumers have different spending patterns. Europe is a wealthy advanced economy and could substitute. But investors may hold the belief that Europeans are lackluster consumers.
This characterization of European consumers is not entirely fair. German consumers, for example, are stronger than first perceived. A pessimistic bias has been built in to Germany’s initial economic data releases.
Over the past decade, German retail sales data has been revised up 60% of the time and the broader personal consumption figure 63% of the time. Using only the initial data releases, German retail sales appear dramatically below the 2015 level. The reality is sales are substantially higher. Personal consumption data is down across the decade on the initial numbers but up on the revised data. The investor problem is that first impressions last, and revisions are often overlooked. If initial data releases were closer to the stronger eventual outcomes, investors might have a more positive mindset on Europe’s economy.