U.S. retail sector perks up

March 13, 2012

One month’s data may not a trend make. Even so, this morning’s batch was pretty solid. U.S. retail sales rose 1.1 percent in February, the biggest gain in five months, and January’s numbers were revised up. Some of the rise reflected higher gas prices, but much of it appeared to be real.

The National Federation of Independent Businesses’ small business optimism index also rose, for a sixth straight month.

Eric Green at TD Securities says that as far as potential revisions to GDP forecasts, he’s keeping his powder dry for now:

This will probably lead to some upward revision in the monthly consumption data that feeds into GDP, but at the margin. The main weakness in recent consumption data has not been in objects you buy, take home, or eat, but in services which is not captured in the retail sales data. We keep our GDP forecast of 1.7%, one already predicated on very strong gains in consumer spending for February and March.

Economists at Goldman Sachs, however, thought differently:

Based on this report, we have increased our tracking estimate for Q1 real GDP growth to 2.0%, from 1.8% previously.

The releases come just as the Federal Reserve gathers to set monetary policy. No fresh actions are expected on Tuesday as the central bank weighs recent signs of strength against remaining risks to the outlook, including high unemployment and financial instability in Europe.

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