Economic Data Shows Mixed Results, Tapering Ahead
· Although data releases during the week were mixed, the overall tone still favors tapering in the September FOMC meeting. In fact, core retail sales, which directly feed into the calculation for consumer spending, showed potential upside risks to our third quarter forecast.
· In contrast, single-family housing starts and permits fell on the month, which may give naysayers ammunition to question the sustainability of the housing recovery. The disappointing July reading in single-family starts does not coincide with the stark improvement in builder sentiment. We suspect the disconnect is due to temporary factors.