WHAT TO WATCH: RETAIL SALES

Retail SalesAfter a strong holiday season, Americans ramped up spending in January on a variety of goods.

What is the Retail Sales report? Produced by the Commerce Department, the report measures a sample of store receipts from businesses of all sizes. It is the timeliest indicator of broad consumer spending patterns, and usually the first picture of consumer spending for a given month.

What’s happened recently? January Retail Sales rose 0.2 percent, marking three straight months of positive gains. Core Retail Sales, which excludes highly volatile items like autos, gasoline, building materials and food services, also increased 0.6 percent.

What’s the bottom line? Low gas prices and borrowing costs seem to have created a window of opportunity consumers are taking advantage of in the retail sector. This is significant, since consumer spending makes up more than 70 percent of economic growth and is the single biggest driver of the economy.

When economic reports like the Retail Sales report show positive momentum, investors could be tempted to move their money out of stable investments like Bonds and into riskier assets like Stocks, to take advantage of gains. When money is shifted from Bonds to Stocks, the result can be a negative impact on home loan rates, since home loan rates are tied to Mortgage Bonds. However, other factors can also influence the markets, from economic reports at home to uncertainty overseas, so it’s always important to look at the whole picture.

I’ll continue to monitor economic reports closely. If you have any immediate questions, please call or email today.

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