“There’s no doubt about it, December’s US retail sales figures are off-the-charts bad,” notes ING’s developed markets economic James Smith and adds: “But there are a few reasons to treat these numbers with caution, as we think the strong jobs market should support a rebound over coming months.”
Key quotes
“We’ll have to wait and see for the next few reports to see if this data was a blip, but either way, the outlook for consumers still looks decent. The jobs market remains in very healthy shape, and wage growth continues to rise as businesses find it harder and harder to fill vacancies. At the same time, the recent plunge in gasoline prices will put extra cash in the pockets of consumers, helping to offset the waning impact of last year’s fiscal stimulus.”
“Admittedly, the overall growth picture for the first quarter looks fairly mixed. The impact of trade uncertainty, the government shutdown, the recent polar vortex as well as financial market wobbles could pull annualised 1Q growth below 2%.”
“That will likely see the Fed remain on pause this quarter, but we still feel the combination of a solid economic backdrop, perhaps coupled with a gradual easing in trade tensions later this year, will see policymakers deliver one further rate hike in 2019.”
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