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December retail sales are good news when looking at the whole picture of 3.2 percent yearly growth rather than one single frame for the month.

December retail sales were up 3.2 percent over the same month the year prior, which is the whole picture and not the decrease of 0.9 for the month reflecting one single frame of data.  The year-over-year increase in retail sales tells the big picture of growing demand for goods and services that is the main engine of the U.S. Economy.

The yearly increase of 3.2 percent in retail sales mirrors the improvement in the financial confidence of consumers.  The Money Anxiety Index, which measures consumers’ financial behavior, decreased by 12.9 index points from December 2013 to the same month in 2014. The sizable decline in the level of money anxiety among consumers during 2014 is the largest yearly improvement since the Great Recession.  

The link between consumers’ spending habits and their level of financial worry and stress is strong and significant.  Research presented in the book Money Anxiety clearly shows how consumers reduce their spending at the first sign of an economic slowdown.  Conversely, consumers gradually increase their spending when the economy is improving, as in the case of the 3.2 percent increase in retail sales during 2014.

 


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