Confirming that the US economy is indeed heating up considerably and the Fed is rapidly falling behind the curve, not only did today's blistering CPI come in well ahead of expectations, printing at the fastest pace since 2013, with the core CPI coming in at a dangerously "overheated" 2.3%, above both expectations of a 2.1% print, and well above the Fed's target of 2.0%, but moments ago the Census Dept. released January retail sales data which showed that after a tepid holiday spending season, US consumers started off 2017 with a bang driven perhaps by optimism over Trump's new administration, as headline retail sales jumped 0.4% in the month, better than the 0.1% expected, after rising an adjusted 1.0% in December (up from 0.6%). Sales have now grown in every month since August last year.
Retail sales excluding autos rose by a blistering 0.8%, double the expected 0.4%, and also double the upward revised 0.4% in December, while the Control Group also rose 0.4%, more than the 0.3% expected, and in line with last month's 0.4% (the retail sales ‘control group’ excludes food services, automobile dealers, building materials and gasoline stations).
On an Y/Y basis, retail sales surged 5.6%, the biggest annual increase in nearly 5 years, since early 2012.
The figures indicate that the US consumer has been busy spending since Trump’s election in November, despite recent weakness in wages, which on a real basis have tumbled, prompting some to wonder how much longer can this spending spurt continue, especially in light of the surge in inflation, which rose 2.5% in january, the fastest rise in nearly 5 years.
A breakdown of key spending categories shows that virtually every retail spending subsector showed growth except for Motor Vehicles, which dipped 1.4% on the month, and miscellaneous store retailers, which were down 0.2% in January. Furniture and home furnishing stores, as well as Internet retailers were both unchanged on the month.