Retail Sales

Retail sales measure the total dollar value of merchandise sold at retail stores in a given month. It's released monthly in the US, mid-month, and it's one of the most-watched consumer indicators. Strong retail sales = consumers are spending = economy is healthy = Fed may stay hawkish. Weak retail sales = consumers are pulling back = recession risk = Fed may cut. The headline number includes auto sales, which are notoriously volatile. "Core retail sales" excludes autos and gives a cleaner signal of underlying consumer spending. Even better: "control group retail sales" (which goes into GDP) excludes autos, gas, and food services for the truest read on discretionary spending. Retail sales matter because consumer spending is roughly 70% of US GDP. If consumers stop spending, the economy slows. The Fed watches retail sales as a real-time read on whether their policy is working to slow the economy down (or cool it off if it's running hot).