Another day, another reason to think that the economy’s stronger than previously thought. Or, perhaps it’s more accurate to say that the economy’s not as weak as the consensus expected.
Whatever language you prefer, there’s no getting around the fact that the economic data trickling in continues to offer reasons for rethinking that 2007 will deliver pain and suffering on a macro scale. But lest we get too excited, we don’t expect that GDP will suddenly surge to the sky. A downshift in economic momentum is still underway, but the downshift looks set to be mild, or at least milder than many recently thought.
The latest evidence for a touch more optimism comes by way of this morning’s retail sales report for December. The U.S. Census Bureau reported that retail and food service sales advanced by 0.9% last month over November.
That’s impressive on several fronts. First, 0.9% for December is more than twice as strong as December 2005’s 0.4% gain. Second, a 0.9% rise is the best monthly gain since July’s 1.4% surge. In addition, looking at 12-month changes in retail sales reveals that December’s pace of 5.4% over the previous December suggests a turnaround is in progress.