Also notable was the 1.1% decrease in sales of building materials, the fifth
consecutive decline. What is notable is that overall sales are doing well despite weakness in housing-related areas. This supports the idea that the weakness in the housing sector is being offset by strength in other sectors.
The retail sales report is notoriously unstable, and revisions tend to be large. Hence, judging the holiday shopping season on today's report is a risky gambit. It would be better to take the data with a grain of salt, await the January data and combine the data with reports from retailers and private data collectors such as the International Council for Shopping Centers.
That said, there does appear to be momentum in consumer spending, and the
decline in energy costs makes it likely it continues in early 2007, making it likely that growth will move toward 3% or more and pushing the Fed further to the sidelines.
P.S. Will you be there when Cramer makes his next move?
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Tony Crescenzi Blog Credit Markets Signaled Calm to Stocks 1/11/2007 3:03 PM EST The bond market's refusal to go along with a skittish equities market was an important signal.
Tony Crescenzi Blog Why TIPS Sold Poorly 1/11/2007 2:03 PM EST The recent decline in energy prices contributed to a lackluster securities auction.
Tony Crescenzi Blog Fed Departure Could Tip Scale More 1/11/2007 1:36 PM EST If Cathy Minehan is replaced by a hawk, the balance of power will slide further.
Tony Crescenzi is the chief bond market strategist at Miller Tabak + Co., LLC, and advises many of the nation's top institutional investors on issues related to the bond market, the economy and other macro-related issues. At the request of the Federal Reserve, Crescenzi is a regular participant in the board's Livingston Survey of economic forecasters. He is also the author of The Strategic Bond Investor. At the time of publication, Crescenzi or Miller Tabak had no positions in the securities mentioned in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Crescenzi also is the founder of Bondtalk.com, a popular Web site covering the bond market and the economy. Crescenzi appreciates your feedback; click here to send him an email.
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