Retail Sales rise in February to support economic outlook of the United States

The world’s leading economy recovery road seems underway as reported in recent fundamentals whereas the country’s Retail Sales rose beyond expectations throughout the month of February despite the fact that demand is still weak due to a lot of factors that contribute of narrowing demand and trimming off spending.

The U.S economy released its Retail Sales Report for the month of February coming in better than markets projections of -0.2% to reach 0.3% and higher than the previous 0.5% which got revised to 0.1%, meanwhile Retail Sales Excluding Autos rose from the previous 0.6% that got revised to 0.5% to reach 0.8% which also comes below markets expectations of 0.1%, finally Retail Sales excluding Autos and Gas rose to 0.9% compared with the previous revised 0.5% and the expected 0.3%.

It seems that better economical conditions along with stimulus plans provided from the government to support growth continues to support growth in the U.S whereas the initial stimulus plan presented almost a year ago by President Barack Obama that aimed to boost spending still affects spending thus raising retails sales, whereas Retail sales accounts for nearly 50% of consumer spending in the U.S.

the world’s leading economy still needs a long way to recover from the worst financial crisis in decades where challenges still persist in the economy such as high unemployment and tight credit conditions that will surely affect consumers and trim off their spending not to mention rising inflationary levels that would weaken demand even further in the U.S over the upcoming period where expectations show that inflation will rise and threat the economy in the upcoming period due to the rise in energy prices that would affect prices, thus putting more pressure on consumers and limit their ability to expand their spending patterns and that will affect growth in the U.S as spending accounts for nearly 2/3 of GDP.

 Retail Sales report showed that dropping demand in most sectors whereas the Motors Vehicles and parts along with healthcare and personal care declined further in February compared with the previous reported estimate for both sectors in January. meanwhile, the rest of the sectors reported witnessed a continuous rise especially electronics that rose by 3.7%, Good and beverages that rose by 1.3% and building materials that rose by 0.5%.

But with Unemployment still standing at quarter century record high of 9.7%, it will continue to hammer down economical activities along with tight credit conditions, thus contributing in narrowing spending and shrinking economical growth in the world’s leading economy, but the overall picture for the first quarter of this year shows broader improvement in the economy thus supporting the fact that this year is a recovery year for the United states.

Meanwhile investors awaits the release of Uni. of Michigan confidence report which is projected to show further rise in confidence along with business inventories that is projected to show a rise in activities in the month of January. Investors will turn bullish today as the report comes to support the economic outlook for the world’s leading economy therefore trading with risky assets and high yielding currencies are highly projected to be targeted by investors, thus leading to a decline in the value of the Dollar and a rise in Stocks, commodities and high yielding currencies throughout today’s trading session.

In addition, the U.S economy released its University of Michigan confidence report coming in below the previous 73.6 and the expected 74.0 reaching 72.5 where the number of people that thought economic conditions is better dropped to 80.8 from the previous 81.8 adding to that the number of people that thought the economy’s outlook is improving declined to 67.2 from the previous 68.4.

As for inflation outlook, one year outlook, it rose slightly to 2.8 percent from the previous reported estaimte of 2.7%, while the five year ahead inflation expectations remained unchanged at 2.7 percent, putting more pressure on the Fed about the expected inflation levels as improvement in economical conditions along with rising energy prices will pressure prices to the upside.

In addition, the world’s leading economy released the Business Inventory regarding the month of November where the index came out flat in the month of January, that came below market expectations of 0.1%, while better than the previous reported estimate of -0.2% that got revised to -0.3 percent.