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Chart of the Day / Why U.S. Retail Sales Grew at their Fastest Pace in 5 Years

Why U.S. Retail Sales Grew at their Fastest Pace in 5 Years

July 17, 2018

Apparently, the U.S. consumer is alive and well.

Retail sales were up solidly for June 2018, as households increased their purchases of autos and a range of other goods, which also just boosted expectations for better than expected second quarter GDP growth.

According to the U.S. Commerce Department, retail sales were up 0.5% for June 2018.  That means retail sales are up 6.6% year over year.  The increase last month followed an even bigger spending spree in May, when sales grew 1.3% instead of a previously reported 0.8%.

Sales at health and personal care stores leaped 2.2% in June.

Restaurants posted a 1.5% gain. Internet sales jumped 1.3%. And auto dealers reported a 0.9% increase, said Market Watch.

All as Trump tax cuts, a stronger hiring and a plummeting unemployment rate give American’s much more confidence in the U.S. economy.

“This puts the economy in a very, very good position as it starts its 10th year of forward movement in July,” said Chris Rupkey, chief economist at MUFG, as quoted by Reuters. “This strengthening economy gives the Federal Reserve the green light to raise rates a third time this year at their September meeting.”

This all comes after consumer spending – which accounts for more than two-thirds of U.S. GDP – cooled off in the first quarter of the year.

Better yet, U.S. GDP could now be on course to easily top 4%.

In May 2018, a good number of analysts had already increased their estimates.

  • Amherst Pierpont Securities raised its estimate to 4.5% from 4.2%.
  • Macroeconomic Advisers increased its forecast to 4% from 3.6%.
  • Natwest raised its projection to about 4% from 3.2%.

Long story short, it would appear the U.S. consumer is alive and doing very well.

At current pace, we wouldn’t be shocked to see the Dow Jones well above 26,000 by the end of the current year.  Stay tuned to this page for more.