The last two days’ stock market rally rebound was blamed (assigned for headline purposes) among other things on the better-than-expected retail sales data yesterday morning. Ignoring the fact that it was 92% correlated with USDJPY, the facts are, as Bloomberg’s Joseph Brusuelas notes, that the data showed discretionary spending growth continuing its almost-three-year slide.
The topline retail sales number reported yesterday exceeded forecasts. It was bolstered by rising gasoline prices and an increase in holiday food purchases, even as consumer spending slowed modestly in December due to a reduced pace of demand and declining sales at department stores. The details of the report show discretionary spending took a fairly large hit in December. Consumer spending has steadily slowed since hitting a peak in 2011.