US economic data continues to show the strength of the economy: what do the numbers reveal about the solidity of the United States and the Fed’s monetary policy?
The United States continues to demonstrate economic strength and resilience: Retail spending increased in March for the second consecutive month, underscoring the strength of US consumers fueled by a robust job market.
The futures on US shares are increasing, benefiting from the climate of optimism about the recovery of the world’s leading power. The yield on the benchmark 10-year note jumped 10 basis points to 4.62%, its highest level since Nov. 14, after March retail sales grew more than economists estimated and gains in February have been revised upwards.
EUR/USD was also impacted and lost traction, falling below 1.0650 and making investors wonder about future parity. Positive data from the United States helped the greenback regain its strength. In the background, meanwhile, the uncertainty about what the Fed will do in the next meetings is accentuated, with the rate cut issue difficult to resolve.
United States, the economy is booming and the Fed hesitates
U.S. retail sales increased 0.7% last month, the Commerce Department’s Census Bureau said Monday. February data was revised upwards showing that sales recovered by 0.9% instead of 0.6% as previously reported. Economists polled by Reuters had forecast that retail sales, which mainly involve goods and are not adjusted for inflation, would rise 0.3% in March.
Despite inflation and higher financing costs, spending continues to hold up, somewhat overshadowing the difficulties of low-income families, thanks to the resilience of the labor market.
“An important reason is that while low-income consumers have been disproportionately affected by inflation, they have also been the biggest beneficiaries of the robust labor market”, Bank Economists of America Securities wrote in a note reported by Reuters. “Low-wage workers have seen the largest cumulative wage increases since the pandemic began.”
While consumption likely slowed from the strong pace of the fourth quarter, it likely remained sufficient to support the economy in the January-March quarter. Estimated growth for the first quarter is currently 2.4% annually. The US economy grew at a pace of 3.4% in the October-December quarter.
The report follows this month’s news of strong jobs gains in March and strengthened expectations that the Federal Reserve may delay cutting interest rates this year. The start of Fed monetary policy easing continues to be postponed. Officials say it requires a greater degree of confidence that inflation is on a sustainable path toward their 2% target. Traders are no longer discounting a rate cut before November, while at the beginning of the year, decreases in the cost of money already in March were fully discounted.
Original article published on Money.it Italy 2024-04-15 15:36:51. Original title: Economia Usa più forte di tutti? Questi dati confermano la corsa (e i guai per la Fed)
