The retail sales data showed drops across discretionary spending while auto sales and building materials rose, indicating some confidence to make larger purchases.
Roberto Perli, a partner at Cornerstone Macro LLC in Washington and a former Fed economist, pointed to several headwinds in December that may not be repeated. “It’s just one month, and the Fed is never swayed by one month of data --most of the times wisely,” he said.
Even so, the retail data made it tougher to see the chance that the economy would stay strong enough for the Fed to hike again later this year.
“This is really a consumer-led recovery,’’ said Omair Sharif, senior U.S. economist at Societe Generale SA. “If the consumer starts to falter, that’s almost certainly going to cause the Fed to be much more patient.’’
Loretta Mester, president of the Cleveland Fed and one of the policy makers who’s still been talking up the possibility of a 2019 rate increase, said in a speech Tuesday she’d be paying close attention to consumer confidence.
“We will need to keep a close eye on whether household sentiment weakens so much that people postpone spending or whether they remain cautiously optimistic and continue to spend,’’ Mester said.
This article provided by Bloomberg News.