US Redbook Slightly Softer

This week’s US Johnson Redbook Index has just been released by Redbook Research, the data relates to the week ending April 4th. The month on month reading for this Retail Sales proxy indicator has come in at -1.0% against last week’s contraction -0.5%. The year on year print is 2.6% against last week’s 2.9%.

Today’s Redbook figures are down on the week but still show enough evidence of activity to confirm the strength in the headline US Retail Sales data which recently showed a strong pick up and surpassed all economists expectations and forecasts.

A pick up in the weather situation is being cited as a reason that shoppers have returned to the malls and city centers across the US, the acceleration that we are now seeing in the Retail Sales numbers is the release of the backlog of demand that had been build up over the harsh winter season.

Employment growth is also contributing to the acceleration in consumer demand, previously out of work individuals are now using their new pay packets to make the purchase of necessities that they would previously have postponed.

Although any up turn in economic activity is welcome regardless of the indicator, the US, not unlike the UK, needs to be careful that it does not become too dependent on consumer lead growth to fuel the recovery.

The subdued US Dollar is undoubtedly helping the export situation and currently this is feeding into the recovery, there is a danger however that Dollar appreciation could wield a detrimental impact to the trade element of the economic engine.

Further, the US is not currently undertaking the necessary investment required to solidify the growth into the future, infrastructural investment opportunities are being left solely to the private sector and this is resulting in cherry picking which in turn reinforces the asymmetrical nature of the US recovery. The US authorities need to be vigilant that growth in consumer activity is not taken as representative of the strength of the overall recovery.