US: Stimulus and recovery effect on economic activity data

An important data as a reflection of economic activity and spending capacity; On the retail sales side, we see a 9.8% increase in the headline and an 8.2% increase in core sales excluding gasoline and automobiles. Market expectations were already high, anticipating the effect of 1400 USD paychecks, the realizations are even higher than that. It shows that the economy is doping on fiscal stimulus packages, but there is also a certain momentum for recovery. At the same time, strong employment growth in March with the reopening of closed businesses explains the recovery in retail sales. Because those who return to work can spend more reliably, as they also regain regular income. The effect will be much more permanent than paychecks. Of course first, the savings will be replaced. So, on the one hand, the savings rate will increase again.

When we look at the sub items; We are seeing an increase in all of the retail subcategories, with increasing consumer demand with Biden checks and strong business recovery. We see that e-commerce sales are recovering, however, the rapid progress of Covid-19 vaccination and the easing of the epidemic restrictions seem to have positively affected the retail side, which is most affected by social distance. Restaurants increased by 13.4%, while clothing retailing increased by 18.3%. As the mobility increases, like the April-May period, the service category will also get better. Gasoline increased by 10.9% with the effect of high fuel prices; In automobiles, it is seen that dealer sales increased by 15.1% despite the semiconductor raw material shortage of the manufacturers. In retail sales, no price correction; This should also be taken into consideration while making an evaluation.

In jobless claims, the average of 4 months fell below 700K, and weekly applications fell below 600K. This explains the improvement in the labor market and their return to work. It indicates a proportional decline. As vaccination advances, weather conditions improve and restrictions eased, openings will bring more jobs back.

The Fed keeps inflation concerns light and monitors the long-term effects of seasonal realizations. Therefore, they will not be disturbed by the current inflation levels and the estimated 3% levels that it will rise. Rather than yield control, the prominent point is the QE tapering communication as the economy is getting better. Powell said in his speech yesterday that QE will be reduced before interest rates are raised. The Fed will again gradually and gently begin to normalize and draw abundant liquidity, which will be verbally guided well before 2022.

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