What the Retail Sales Data Means

“America goes shopping again,” exulted one commentator. “The American consumer is back, big time,” chortled another. “Retail sales increase notably more than expected in July reflecting across-the-board strength in sales,” commented the more sober economists at Goldman Sachs, reporting a 0.8 percent increase, the first rise in four months. The figures surprised, exceeding the consensus forecast of 0.3 percent. Throw in the nascent recovery in the housing sector and policy wonks, for whom the real economy exists merely to provide grist for the policymaking mill, and talk quickly turned to just how Federal Reserve Board chairman Ben Bernanke and his monetary policy committee would react. The consensus is that those who are hoping that Bernanke will use the platform provided by the gathering of central bankers in Jackson Hole, Wyoming, later this month to launch QE3 are likely to be disappointed. The retail sales and other data, says Chris Williamson, chief economist at Markit, “argue against the need for additional stimulus from the Fed.”