U.S. retail sales posted a 1.3 percent gain in April, their largest leap in more than a year. But, do the latest retail numbers mean that fear of a U.S. recession and/or a major stock market pullback is no longer in play?
This is clear evidence that consumer spending is alive and well, PNC Financial Services Chief Economist Stuart Hoffman said of the April retail numbers.
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A healthy U.S. consumer tells a different story than U.S. bears, who have been predicting a recession since late 2015. A recent MarketWatch poll found that economists are expecting a moderate, but healthy, 2.3 percent growth rate from the U.S. economy in Q2.
Economic growth in Q2 will likely come up short of its pace over the past two years. Weakness in the manufacturing sector, as well as a softening jobs market are two contributing factors.
The next major catalyst for the U.S. economy could be another Federal Reserves interest rate hike, which economists believe could come as soon as June.
The Federal Reserve doesnt have a very good track record of tightening rates without triggering recessions. Only three of the Feds 12 tightening cycles since the Great Depression did not resulted in a recession within two years.
After a historically weak open to 2016, the SPDR S&P 500 ETF Trust (NYSE:SPY) is now up 1.2 percent year-to-date.
Disclosure: The author holds no position in the stocks mentioned.
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