CIBC Private Wealth
April 16, 2024
Money Financial literacy Economy Professionals Commentary NewsMorning Market Brief
US retail sales for the month of March were released yesterday, showing the US consumer remains relatively resilient. US households continue to show their relative strength despite elevated inflation and high borrowing costs. This has helped fuel US economic growth. Canada’s economy can benefit from a strong US consumer and economy.
- Retail sales in the US rose by 0.7% in March over the previous month. March’s increase added to the 0.9% increase posted in February and was higher than the 0.4% increase expected by economists, based on a Bloomberg survey.
- Sales at gasoline stations, personal care stores and food and beverage stores drove March’s increase. E-commerce sales also increased over the month, rising by 2.7% in March. Conversely, sales declined for clothing and automobiles.
- US consumers continue to prove their relative strength despite tight financial conditions. While US consumers have been facing difficult financial conditions, a robust labour market and pent-up savings have helped spur consumer demand. As a result, US economic growth has remained stronger than expected.
- As with most other economic announcements, the question turns to how this might impact the US Federal Reserve Board (Fed). Stronger demand could keep inflationary pressures higher than wanted, which could delay Fed rate cuts. Strong consumer demand, a strong labour market and still-elevated inflation appear to be pushing the Fed to hold off cutting rates until later in 2024.
Signs are pointing to a still-strong US consumer in the first quarter of 2024, which might help boost economic growth. Looking inward at Canada, a strong US consumer and economy could benefit economic conditions here. Strong demand in the US could lift Canadian exports to our southern neighbours, thus helping economic growth.
If you would like to discuss this economic and market update or have questions about your finances and investments, please feel free to contact me anytime.