After a disappointing Black Friday, the infamous post-US Thanksgiving shopping day, the success of Cyber Monday has become even more important.
US Retail Sales have been lackluster so far this year. They have definitely been less than expected when economists were forecasting much higher economic growth that would then translate into higher consumer spending.
And, despite a slowing in the growth of US Retail Sales over the last three years (see chart above), the abundance of Federal Reserve liquidity has kept the problem mostly under the rug. This has been aided by a very strong Retail Sales lobby in the US which is quick to furnish the press with their positive spin. In fact, without looking at the details, most would conclude that the last couple of years have been fantastic.
As December unfolds, expect the spin from the Retail Sales lobby to crank into high gear. The initial reports from Cyber Monday exhibit this already with no mention that it might be very difficult to make up for the disappointing Black Friday total sales.
Just like with its declining impact on unemployment, the effect that the Federal Reserve’s Quantitative Easing on US Retail Sales may be fading as well. Not a great foundation if US stocks are to continue their torrid pace.
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