Retail sales continue to come in relatively strong compared to 2009.  Redbook reported robust weekly sales of 1.9% and the ICSC reported sales higher by 0.4%.  Retailers have said the winter storms will hurt sales, but could actually boost online shopping (i.e., Amazon will continue its trajectory towards the moon). In the grand scheme of things retail sales are still quite weak and the year over year gains look less impressive when you look at the broader picture:

GDP was revised down sharply this morning, but didn’t seem to impact equity markets much.  The government is now reporting 2.2% economic growth vs a prior reading of 2.8% and estimates of 2.7%.  Revisions lower were broad as government expenditures were reduced, consumption expenditures fell and fixed investments fell.  The GDP price index came in at 0.4% and continues to exhibit weak demand and few signs of inflation.

Existing home sales are clearly showing the extent of the government propped recovery.  Sales soared again this month as investors moved quickly to purchase homes and benefit from the tax credit.  Sales were up 7.4% in November.  The NAR now estimates that the government program will add 4.4MM units to sales by June.   The extension of the homebuying credit is helping to thwart the usual seasonal weakness in housing markets.  The bigger question here is how long can the government prop up the housing market and is the short-term gain beneficial in the long-run?