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The US economy is not that complicated

By Matt Phillips
Published Last updated This article is more than 2 years old.

US retail sales posted 0.5% month-over-month sales growth in December. The consensus on Wall Street was for a gain of around 0.2%.

That’s pretty decent news for the most important shopping season of the year—particularly given that consumer spending accounts for roughly 70% of US economic activity. The boom in auto sales—fueled in part by the Federal Reserve’s low interest-rate policy—helped drive December’s outperformance. But even excluding car data, December retail sales were still decent, up 0.3%, versus expectations of 0.2%.

We’ve said it before and we’ll say it again. The US economy is fairly straightforward. US consumers are buying cars. And they’re increasingly looking like they want to buy houses. As long as those two dynamics stay in place, it will take a lot—like, say, a completely destabilizing flirtation with defaulting on the largest national debt in the world—to derail things.

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