The view is growing worldwide that only the US consumer can retrieve other major credits from the ditch. Agreed.
China recently reported a Feb trade deficit which was much larger than expected. It usually swells that time of year (lunar new year is celebrated in Feb) but this time it was larger than in 2010 and 2011. So that is a worry to the market crowd. Japan will do better than economists understand, just not a barn burner. Canada just reported a weak Payroll number (contrary to our expectation). Brazil, the one-time Latin American powerhouse now can’t seem to get out of its own way. The E-Z is going nowhere, Germany included. Industrial orders for this credit fell 2.7% in Jan for goodness sake. That doesn’t say much for its export sector. Last year we predicted much weaker than expected results for both Germany and the rest of the E-Z and it looks like we were right. The UK will do a bit better than it is expected to do, so that will help a tad.
All in however, there are no emerging stars on the world scene, except one – the US consumer.
Key is attitude. The US consumer is sick of hearing of the antics of the clowns in the E-Z. They are ignored. But signs of domestic employment vigor have a very positive impact on attitude, for both the employed and of course, those on the hunt (and a mild winter hasn’t hurt either).
This explains today’s improved Retail Sales result for Feb. Energy prices were not the whole story; there was plenty of spending elsewhere and not just for vehicles, and, in spite of higher gasoline. Without the recent spike in gasoline prices we would have seen Core Retail Sales ex-gasoline at perhaps +0.9% instead of the +0.6% print. If we hit $5/gallon gasoline, core retail sales ex-gasoline will print perhaps 0.2%.
Barring that impact, US consumers will remain the world’s #1 engine right through 2012. Until earned income catches up, they will borrow the difference.
Robert Craven
No comments:
Post a Comment