Report | Souring retail sales for February 21, 2018
Retail sales for
January proved disappointing, contracting and falling below expectations. Despite
the weak retail sales, inflation, measured by the consumer price index (CPI),
surprised on the upside with apparel prices posting their largest monthly gain
since February 1990. Bond yields jumped after the inflation data, pushing the
10-year Treasury to its highest rate in about four years. While we do not think
this pace of inflation is sustainable, we expect continued upward pressure on
prices throughout 2018. On the policy front immigration reform stalled yet
again, putting the “Dreamers” and the labor market potentially at risk if the
DACA issue is not resolved by next month. The administration finally released
its infrastructure plan, though it seems underwhelming and unlikely to have a
significant impact on the economy.
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