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August 11, 2005

Relief at Disappointing Retail Sales?

Amey Stone

Here's a riddle for investors:

When is a disappointing retail sales number a good thing?
Answer: When the real concern is that the economy is overheating and interest rates will need to rise a lot further to cool it off.

That's the explanation offered by ActionEconomics for why stocks are rallying today even though the government's number for retail sales growth in July was 1.8% vs. the 2.1% expected.

"The U.S. retail sales data have taken some of the edge off bond market fears over the two-month surge in consumer spending through the June-July period," the firm wrote to clients this morning.

10:31 AM


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