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WHAT GIVES

Bad weather might not be the only thing slowing down the US economy

In this photograph taken by AP Images for Sears Holdings Corporation, A consumer checks out a refrigerator at a local Sears’ store. The retailer recently extended its layaway program to include home appliances in an effort to help consumers who haven’t taken advantage of the government’s appliance rebate program. For more information, visit www.Sears.com/layaway. (Paul Beaty/ AP Images for Sears Holdings Corporation
Paul Beaty/AP Images for Sears Holdings Corporation
Maybe it’s not just the cold.
By Melvin Backman
Published Last updated This article is more than 2 years old.

Conventional  wisdom about the disappointing data points coming out of the US is that a brutally cold winter in major portions of the country had been a drag on growth. But the April (i.e. early spring) retail sales numbers that came in this morning (pdf) from the Census Bureau are challenging that view a bit; they’re up only 0.9% year-over-year, and stripping out auto sales makes the number flat.

Yet American consumers are more confident, more employed, and more flush with savings than they have been in a while—and wage growth, long elusive for  the average US worker, looks like it’s on the way. So what gives?

Bank of Montreal economist Jennifer Lee sums it up nicely in a note to clients:

The Bottom Line:  This report is revision-prone, is only measured in nominal terms, and doesn’t factor in services, which account for 2/3rds of consumer spending. Having said that, this is clearly a disappointing report and shows that the U.S. economy is taking its time getting out of the 2015 gate.

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