USD: Retail Sales data sparks caution – UBS

In a recent analysis by UBS, Paul Donovan discusses the implications of the latest US Retail Sales data, which showed slight softness. Donovan emphasizes the importance of understanding the context of these numbers, particularly in light of inflation effects.

Donovan also notes the potential for revisions and the impact of changing consumption patterns. Despite concerns, he suggests that there is no immediate cause for alarm based on credit card data.

Retail sales data prompts cautious outlook

"US September retail sales data were old news, but slightly softer. While it is tempting to blame the accelerating US inflation rate, retail sales are nominal numbers and include inflation effects. Pessimism should be limited, however. The numbers will almost certainly be revised."

"Ongoing shifts in consumption patterns have consequences (Instagrammers showcasing their latest holiday contribute less to retail sales than buyers of new washing machines). Credit card data suggests no reason to panic."

"The data drought of the US government shutdown places excessive emphasis on old data—and also anecdotal data like today’s Federal Reserve Beige Book. This has shown some signs of political bias in the comments. Anecdotes on whether tariff passthrough is speeding up is of interest."