Even as many Americans are seeing bigger paychecks from tax reform while a rock-solid economy is boosting consumer confidence, the latest retail sales data indicated that consumers are tightening their purse strings.
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The Commerce Department reported Wednesday that U.S. retail sales fell in February for a third straight month as households cut back on purchases of big ticket items such as motor vehicles.
With consumer spending accounting for more than two-thirds of America’s economic growth, does this mean a slowdown is imminent?
Scott Wren, a senior global equity strategist for Wells Fargo Investment Institute, told FOX Business that the underlying fundamentals of the economy are strong, and the retail sales data has not given the bank reason to change their forecast, yet.
“We expect good, not great economic growth going forward,” he said, adding that the recent retail sales have been impacted by a fall in demand for autos, which previously got a boost from shoppers looking to replace cars damaged during the 2017 hurricane season.
Commenting on the retail sales data, Wren added, “This is not a trend. Confidence is high, consumers will have higher wages, they will spend money.”
The bank is looking for slightly more accelerated wage growth as the year progresses. The January jobs report released last month showed worker pay increased 2.9%, an 8-1/2 year high, that sparked a market sell-off as it caused investors to consider the potential of a more aggressive Federal Reserve.
Wren noted that, over the next five to six months, the markets will maintain this hypersensitivity to wage inflation.
Retail sales slipped 0.1% in February. Economists polled by Reuters forecast sales rising 0.3%.