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Retail Sales Forecast

Consumer spending constitutes a big portion of the economy. Thus, retail sales should be watched since they provide an important indication of the future state of the economy.

When consumer spending is increased, more goods and services are sold. This leads to higher production in order to satisfy the higher demand. The increased production in turn leads to increased orders of raw materials.

On the other hand, if consumer spending is decreased because consumers feel uncertain about their future financial state, the economy tends to suffer and lag behind. A tactic applied by politicians in order to stimulate the economy is to give tax rebates. In order to prevent or get out of recession, more money is given to consumers to spend.

The Retail Sales Index is released every 12th of the month by the Census Bureau. It provides estimations about the retail sales of the month that has passed. The information on the retail sales is gathered from different in size and location stores.

The Retail Sales Index represents an indicator of the state of the economy. It is subject to revision on periodic basis.

The report of the Census Bureau includes information on:

  • Retail Sales
  • Retail Sales Ex-Auto

The latter doesn't include sales of automobiles since they are susceptible to seasonal fluctuations and they also represent items of high prices. If included they may distort the numbers.

The Wall Street experts tend to make estimations of the index before the Census Bureau issues its report. Their calculations tend to be close to the actual numbers officially reported. If contradictions occur between the Wall Street calculations and the actual numbers of the Census Bureau then this can be reflected in the performance of the market, since it is uncertainty averse.

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