This week we explore how resilient consumer spending and unexpected inflation dynamics shape our economic landscape and influence investment strategies.
Key Insights:
- Retail Resilience: March saw retail sales increase by 0.7% month-over-month, with the control group sales (a key GDP indicator) rising by 1.1%.
- Revisions Reveal Strength: February’s retail data was revised to 0.9% month-over-month, indicating sustained consumer strength.
- Inflation Concerns: March CPI rose by 0.3% month-over-month and 3.5% year-over-year, with Core CPI (which excludes volatile food and energy prices) climbing 0.4% month-over-month and 3.8% year-over-year.
- Economic Growth Estimates: The Atlanta Fed’s GDPNow model forecasts a Q1 growth rate of 2.8%, up from an earlier estimate of 2.4%, driven by robust consumer spending.
- Interest Rate Outlook: Persistent inflation pressures suggest that the Fed may maintain higher interest rates longer, with potential rate cuts not expected before September.
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