(February 13 – 12:10 ET) – Today’s stronger than expected U.S. Retail Sales report has economists scratching their heads a bit.

BMO Nesbitt Burns Inc.’s Dr. Sherry Cooper, chief economist, warns investors against concluding the recession risk is off. Rather she says, the U.S. economy is “registering a split personality. Manufacturing is in deepening decline while other sectors are floating along.” It notes that today’s retail sales numbers do not take much heat off the Fed.

Cooper says strong January sales cannot make up for poor holiday sales. “So, while this report is not bad news, it is just not very convincing.”

The retail sales report showed a headline rise of 0.7% in January, slightly stronger than consensus expectations of 0.5%. “We need to see February and March hold on to these gains before anyone will get excited. But, so far, so good for Q1 economic activity,” says Cooper. The gains are being partly attributed to large price discounts, which should keep inflation subdued.
-IE Staff