Practical analysis for investment professionals
06 December 2013

Poll: How Will Weak Holiday Retail Sales Affect the Fed’s Strategy?

Posted In: Economics

US retail sales for Thanksgiving and Black Friday are the weakest since 2009. In this week’s CFA Institute Financial NewsBrief, we asked readers how this might affect the Fed’s decision of when to unwind quantitative easing.

US retail sales for Thanksgiving and Black Friday are the weakest since 2009. What does this imply for global economic recovery with regard to a potential response from the Fed?
Poll: How Will Weak Holiday Retail Sales Affect the Fed's Strategy?

The “taper/no taper” discussion in summer 2013 showed us that markets the world over have an acute interest in US monetary policy. Capital flows, yield curves and currencies around the world all moved sharply in response to changes in language from the US Federal Reserve. In August 2013, the Fed delayed the taper indefinitely owing to a somewhat sluggish US economy.

In the United States this past Thanksgiving weekend, overall retail sales (both in store and online) were down 2.9% versus last year (even though retailers initiated holiday discounts earlier in November than in previous years and Internet sales on “Cyber Monday” were up sharply at +16.5%). Although these results are not definitive, we wanted to gauge investors’ perceptions of US economic growth and, ultimately, their views on changes in US monetary policy. Of the 714 respondents, approximately 51% believe that the Fed will maintain or increase QE, whereas the remaining 49% believe the Fed will reduce QE and/or ignore current trends in US holiday sales. Clearly, the market is sharply divided as to what the Fed might do next.

Please note that the content of this site should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute.

About the Author(s)
Ron Rimkus, CFA

Ron Rimkus, CFA, was Director of Economics & Alternative Assets at CFA Institute, where he wrote about economics, monetary policy, currencies, global macro, behavioral finance, fixed income and alternative investments, such as gold and bitcoin (among other things). Previously, he served as SVP and Director of Large-cap Equity Products for BB&T Asset Management, where he led a team of research analysts, 300 regional portfolio managers, client service specialists, and marketing staff. He also served as a Senior Vice President and Lead Portfolio Manager of large-cap equity products at Mesirow Financial. Rimkus earned a BA degree in economics from Brown University and his MBA from the Anderson School of Management at UCLA. Topical Expertise: Alternative Investments · Economics

1 thought on “Poll: How Will Weak Holiday Retail Sales Affect the Fed’s Strategy?”

  1. The Fed definitely won’t be ready for the QE tapering probably till next year that’s if at all necessary.

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