​Strong Economic Data Eases Fears of US Slowdown

Article originally posted on Phoenix Business Journal on June 14, 2019

US consumers splashed out on autos, electronic gadgets and appliances last month, easing fears of an economic slowdown and dampening expectations of a quick interest rate cut by the Federal Reserve.

Headline retail sales rose 0.5 per cent month-on-month in May, the commerce department said on Friday, offering evidence that consumption had accelerated from the upwardly revised retail sales growth of 0.3 per cent in April, even as the trade war with China deepened.

The strong data on consumer spending caused some forecasters to upgrade their estimates for US economic growth in the second quarter of the year, with economists at JPMorgan Chase raising their projections to 1.75 per cent from 1 per cent, suggesting the US was grappling with a modest slowdown at this stage.

While Fed officials have sent strong signals that they were prepared to cut interest rates on the back of a deterioration of the economic outlook and growing uncertainty over US trade policy, economists tempered their expectations for monetary easing in light of the stronger data.

“Decent US retail sales numbers suggest consumers are shrugging off the negative trade headlines and support our view that markets may be too aggressive in their interest rate cut expectations,” said James Knightley, chief international economist at ING.

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Strong data on U.S. consumer spending caused some forecasters to upgrade their estimates for economic growth in the second quarter of the year.

 

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