“Good mood” today meant “bad mood” in the 1990s

Misleading comments on the retail sales print:

“Spending at U.S. retailers rose in December for the fourth consecutive month, capping the strongest year for sales growth since 2014”.

“Definitely the consumers are in a good mood. The confidence is up. We’ve seen the labor market has been rather solid. “These are some positives going into 2018.”

The chart indicates that retail sales follows on the heels of the encompassing nominal spending (NGDP) growth. While the Fed constrains the growth of NGDP, sales will also be “capped”.

In the 1990s, up to the mid-00s, while NGDP growth averaged 5.5%, retail sales growth averaged 5.6%. For the past 7 years, with NGDP growth averaging 3.8%, retail sales grows at the same average rate.



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