A report this morning revealed that retail sales, inflation, and manufacturing activity all reached its expectations. Starting January, retail sales rose 0.4% over the prior month, which is better than the 0.1% that economists were anticipating. In December, sales rose by 1%, which was a 0.6% increase from its initial point.
Prominent sector increases over the prior year came from online retailers such as Amazon, which had a 12% increase in sales over the last year. Significant increases over the last year were also noticed at gas stations because of an increase in price of oil and auto sales.
Inflation has also reached expectations with both headline and “core” inflation topping estimates. Core inflation means that the price of food and gas are excluded, which is preferred by the Fed and economists because it provides a better picture for underlying price trends in the economy.
Headline inflation increased 0.6% over January and 2.5% the previous year. Predictions were for increases of 0.3% and 2.4%. February 2012 was the best year-on-year inflation print. “Core” inflation increased 2.3% over the last year in January and 0.3% over the prior month and is above the Fed’s 2% inflation target. After this report, interest rates spiked, implying the markets think the Fed could raise rates three times this year as projected.
Traders increased their bets on Tuesday due to a March rate hike from the Fed after Chair Janet Yellen’s testimony. Manufacturing updates for the New York region also topped estimates. The New York Fed’s Empire State manufacturing report arrived at 18.7, which was expected to be a 7.0. This was the best reading for the index over the last two years.
These readings had been one of the most positive economic indicators since Trump’s election win.