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What's going on?
The good news: Americans spent more money on shopping in April than they did in any of the past 12 months. The interesting news: the boost was driven mainly by online shopping. And the bottom line: more spending is good news for the overall economy!
What does this mean?
The news that online shopping is dominating retail growth isnt really a surprise to anyone that has been following the ongoing perils of American department stores (like Macys). While the news might be bad for traditional retailers, the big uptick in overall spending is good for the economy. Consumers remain extremely important: they drive about two-thirds of economic activity. So when theyre spending money, thats good for pretty much everyone.
Why should I care?
The bigger picture: Economists are getting more optimistic about economic growth in the second quarter. After tepid growth in the first quarter, theres a big debate amongst economists about whether it was a short-term blip (and/or reporting error, as we explained here) or whether it was indicative of a broader downturn. Fridays data is supportive of the theory that the second quarter will show a healthier economic growth rate.
For stocks: Theres a lot to look forward to this week. Home improvement stores Home Depot and Lowes, which have both had strong sales growth in previous quarters, will report their results. Also, major retailers Wal-Mart and Target will report earnings. So well have a better picture about the health of the consumer at the end of this week.
Originally posted as part of the Finimize daily email.
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