Basic retail sales fell 1.7% in December, the highest volume in almost two decades.
Regardless of the cause, the sudden apparent change in spending has pushed economists to upset their growth forecasts. Goldman Sachs lowered its GDP estimate for the fourth quarter to 1.9%. Bank of America has reduced its forecast to 1.5%.
"The American consumer is holding the global economy on its shoulders," wrote Peter Boockvar, chief investment officer at Bleakley Advisory Group, late last week.
"We'd better hope this is an outlier and that the rebound in equities … is boosting consumer spending," Boockvar said.
It should not be shocking that the Americans are cutting spending by the end of 2018.
The weakness of the retail trade shows how fears of recession can become a self-fulfilling prophecy. There is a feedback loop, positive and negative, between consumers and the market. High prices encourage buyers to spend – and vice versa.
Michelle Meyer, an American economist at Bank of America, said that a sharp deterioration in consumer confidence was the "biggest negative confidence shock" recorded since 2011.
"The consumer is starting 2019 on an unstable basis," Meyer wrote to customers late last week.
Jan Hatzius, chief economist at Goldman Sachs, warned that the magnitude of the decline in retail sales "increases the risk that the underlying rate of growth in consumer spending has dropped significantly."
But Hatzius thinks that the December retail wreck could prove to be an exception, as January's economic reports point to a rebound.
Fortunately, the tragedy of the government's closure is over and the stock market is on fire.
In other words, the confidence shock should ease, paving the way for a rebound in consumer spending.
But beware of the next market storm. If this lasts long enough, it could be enough to reverse the economy.
Buffett's letter is read closely for his investment advice. This year, the memo will be used to better understand the slowdown in economic growth in the United States and around the world and what it means for businesses and markets.
Other fast-food and fast-food restaurants explained how digital investments, delivery programs and menu innovations took place in 2018. Expect these companies to do the same when you're in business. they report the results.
For Domino & # 39; s, digital and delivery are an asset and a way to try to maintain a competitive advantage like Pizza Hut. A few weeks ago, Domino's announced a time-limited initiative that uses artificial intelligence to reward internet users who buy a pizza, even if it comes from a competitor. Investors may want to know how digital technology paid off last year.
4. Coming this week:
On Monday – US markets closed for Presidents' Day
Danielle Wiener-Bronner of CNN Business contributed to this report.[ad_2]