What I Saw Last Week
U.S. Retail Sales were flat in April after increasing an upwardly revised 1.1% (from 0.9%) in March. I had expected to see sales rise by 0.2%. Core sales, that exclude motor vehicles, increased a modest 0.1% after increasing an upwardly revised 0.7% (from 0.4%) in March. I was looking for an increase of 0.4%.
The key to this report – and something that I have been raising for some time now – is that consumers are continuing to hold on to their savings. In the first quarter of 2015, the added income that was garnered from lower oil prices was used to stockpile additional savings instead of boosting consumption. Now that gasoline prices are again on the rise, consumers are not only not liquidating their savings to pay for the higher gasoline costs, but they are adding more to their savings stockpile and not spending.
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