"Consumers continue to spend at a decent pace"
- Russell Price, senior economist at Ameriprise Financial Inc.
Retail sales in the world's largest economy rose more than initially was expected, as Americans were not worried about the threat of higher taxes anymore and increased their spending. According to the Commerce Department, retail sales gained 0.5% in December after an upwardly revised 0.4% rise in November. Analysts, however, expected a 0.2% gain. Sales excluding automobiles and gasoline climbed 0.6% for a second consecutive month.
"Consumers continue to spend at a decent pace," said Russell Price, senior economist at Ameriprise Financial Inc. in Detroit, who correctly forecast the gain in sales minus automobiles. "The payroll tax will have a modest impact on spending. We need faster job and income growth to allow the consumer to shift into higher gear."
Also Tuesday, the U.S. Department of Labor said that the U.S. PPI dropped in December. The U.S. producer prices fell a seasonally adjusted 0.2%, while core producer prices, which exclude the volatile categories of food and energy, added 0.1% last month.
"Both the economy and the industry have a bit underlying momentum that we expect to continue," said Mark Reuss, president of GM North America.
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