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United States

Report | Retail revs up for April 25, 2018

Summary

​It appears as if retail sales turned a corner in March and should continue to fare well in the second and third quarters of this year due to tax cuts, wage growth, and even tax refunds. Meanwhile, energy prices have been rebounding, especially oil which has quietly risen from $26 per barrel to almost $70 per barrel over the last two years. Rising energy prices could slow, but should not derail the U.S. consumer, which should help economic growth rebound in the second and third quarters from an expected lull in the first quarter. Meanwhile, the yield curve continued to flatten despite increased consumer spending and rising long-term rates. The Fed continues to push up short-term rates faster than long-term rates are rising, a normal occurrence. But the spread between 10-year and 2-year Treasury yields continues to fall. In the short run, that does not scare us much. In the medium run, it almost certainly does given that metric's uncanny ability to predict recession. 

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