Retail sales came in at a disappointing .3%, well below estimates. Sure the weather had something to do with it, but that was factored in. With 70% of the U.S. economy derived from consumer spending, this just reaffirms that the recovery will continue to be a “Slog through the mud”. The combination of America’s demographic trends of an aging population which naturally spends less as they get older coupled with a seriously over indebted, overleveraged population, will be a drag on the economy for several more years.
The Federal Reserve is trying it’s hardest to make up the difference of slower consumer spending by throwing money into the economy through Quantitative Easing, but they are having a tough go of it with Retail sales slower than expected and the nation’s overall growth anemic at best at this point in the so called recovery. There is little doubt Bernanke and the Fed are building a bubble, so be sure you know how to “Play with bubbles”.
Regards – Keith Springer