According to Gary Shilling of Bloomberg.com, Consumer confidence and retail sales have not moved in tandem of late. Since the U.S. economic expansion started in mid-2009, a gauge of confidence has risen sharply from a low of 25.3 in December 2008 to 120 in April, and has accelerated recently. After an initial recovery, however, retail sales growth has trended down.
Consumer confidence is ineffective for predicting retail sales. The correlation between the two is weak, and the best fit is between year-over-year retail sales growth in the current month and consumer confidence three months later.
According to the Author of This Blog, “Correlation does NOT IMPLY CAUSATION.”
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