Retail sales are an economic indicator that tracks consumer demand for finished goods by measuring the purchases of durable and non-durable goods over a defined period of time. An accurate measure of retail sales is vital for gauging the economic health of the United States because consumer spending accounts for two-thirds of gross domestic product (GDP). Data on retail sales is compiled once a month by the U.S Bureau of the census.
It is no news that Covid-19 has affected the global economy negatively, which has led to the shutdown of several businesses and millions of people losing their jobs either as a result. Also, companies are cutting down on the number of staff employed and some even closing completely and as such leaving consumers with little or nothing to spend.
U.S. retail sales fell 0.7% in December from the previous month, the further slump in retail sales reaffirms that the continued surge in covid-19 cases is now weighing heavily on the economy and has affected consumer spending negatively. The economy shed 140,000 jobs in December 2020, the first decline since April 2020.
The pandemic has forced consumers to shop more online, but not even e-commerce was spared from the December dip, falling 5.8% from the prior month. Compared with the same period a year ago, online sales are still up more than 19%
Economic analysts predict that the United States Dollar should weaken over the next 12 months, despite the potential of a global economic recovery, secondly, that U.S fiscal spending is no longer as exceptional as before, but the good news is democrats pushed half of president Biden’s $1.9 trillion COVID-19 relief plan through a House committee, advancing $1,400 payments for millions of Americans and other initiatives that republicans call too costly, economically damaging and brazenly partisan. Also, the education and labor committee approved another top Democratic priority; a boost in the federal minimum wage from $7.25 to $15 hourly.
The Congressional Budget Office expects the economy to add an average of 521,000 jobs a month this year, a sign of robust hiring made possible in part by the government aid. But those gains will likely hinge on containing the virus. Employers kicked off 2021 by adding a mere 49,000 jobs in January as deaths from the disease curbed economic activities.
However, Traders should brace themselves up for a period of high volatility, an increase in retail sales will strengthen the U.S Dollar while a decrease in retail sales will weaken the U.S Dollar. The pairs to watch for during the news release are:
EURUSD, GBPUSD, XAUUSD, USDJPY, USDCAD, USDCHF, AUDUSD, NZDUSD
Time Schedule for Retail Sales release:
Date: Wednesday, February 17th, 2021
Time: 2:30pm (GMT+1)
Author: Francis Idowu
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