Article source: ConstructConnect
An Excess of U.S. Retail Demand
Consumer spending is about 70% of gross domestic product (GDP) in the U.S. and 55% in Canada. (The lower percentage in Canada is due to foreign trade being relatively more prominent in overall economic activity north of the border.)
Retail sales, which are widely reported by the media, are an important part of consumer spending (between 40% and 45%), although they are exceeded by spending on services, which are more varied and not quite as easy to package in a summary.
Hence, considerable attention is given to the health of retail sales, with the tie-in to GDP growth usually cited.
After the plunge in U.S. retail sales in the Spring of last year, they recovered quickly. Then they went the proverbial ‘extra mile’. Graph 1 shows that the current level of retail sales isn’t just what might be expected if the pattern from 2009 through 2019 were extended outwards. It’s considerably more.
Yes, there’s been a make-up of the ground lost during the big dip last year, but there’s also been notable additional strength. Several factors have played contributing roles.
