What's going on?

It looks like you and your friends spent some $$! Data for May shows that sales of goods to consumers in the US (a.k.a. �retail sales�) rose 0.5% versus one year earlier. That�s more than markets were expecting � which is reasonably good news for the overall US economy.

What does this mean?

The news is not just good for the retailers doing the selling; it also shows that people are generally confident about their economic prospects (e.g. you probably wouldn�t increase your spending if you thought you might lose your job sometime soon). Given that fuel prices have increased and recent employment data has been quite weak, it�s good to see that the consumer appears to be holding up reasonably well. On a slight side note, it�s interesting that online sales led the gain (once again) while department store sales fell, which is indicative of the ongoing shift to online shopping.

Why should I care?

For markets: All eyes on jobs� and July. On Wednesday, the US Federal Reserve (the Fed) will publicize the outcome of its June meeting. It�s very unlikely to announce an interest rate change, but investors will be paying close attention for signs of its next potential interest rate increase. Tuesday�s retail sales data makes such a decision a little more likely (as the Fed wants to see an improving economy before raising interest rates) – but employment data out in early July will likely be a key determinant (remember: May�s job data was very weak).

The bigger picture: US economic data is starting to make more sense. A few months ago, the data showed economic growth declining coupled with exceedingly strong job growth. As we pointed out at the time, that didn�t make much sense. Recently, the data has reversed, i.e. economic growth has picked up and job growth slowed down. Perhaps we are starting to see a more accurate picture of the US economy now.