Announced this morning, Retail Sales for December increased 0.6%, higher than expected and double the increase in the previous month. Monthly sales for Nonstore retailers, up 1.5%, and Clothing & clothing accessories stores, also up 1.5%, were strong while monthly sales at Health & personal care stores, down -1.4%, and Gasoline stations, down -1.3%, were relatively weak. The Control Group, which is a closer measure of the inputs for GDP that excludes sales for food, autos, building materials, and gas stations, increased 0.8% in December, also more than expected and above the revised level from the previous month.
Overall, both headline retail sales and the control group increased in December and were higher than the previous month. Consumers are maintaining spending levels in the current environment. Even high-frequency data shows additional activity, as the weekly average of people passing through TSA checkpoints recently reached levels of 300,000 more individuals than in 2019. Couple that activity with a resilient labor market, it gives even more confidence for consumers to spend. The Federal Reserve will need to contemplate this resilience and its effects on inflation and the economy when considering moderating its policy actions in the coming months.
In all, the 10-year US treasury yield ticked higher following the report and equity futures are lower as we head into the market open.
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