US Retail Sales show that the consumer remains a sleeping giant

12th March 2015 By: Ranko Berich

Today’s Retail Sales data shows that the US consumer remains a sleeping giant. After a nice little boost to spending over the Christmas period, consumers have gone back to bed and retail sales have dropped off.

However, this is not a cause for concern. Consumer spending hasn’t been a main driver of the US economic recovery and we are still yet to see a sustained period of strong real wage growth. All in all, it’s entirely understandable that US consumers haven’t opened their wallets unconditionally.

Looking ahead, it will be really interesting to see what happens to consumer spending once real wages start to grow in earnest. Earnings are expected to pick up over the coming quarters as the labour market tightens. Once consumers are handed this windfall, spending could jump rapidly, adding an unexpected boost to the already growing economy.