US consumers keep splurging

<p>Kia ora,</p><p>Welcome to Wednesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.</p><p>I'm David Chaston and this is the international edition from Interest.co.nz.</p><p>And today we lead with news bond yields are rising fast today as hot American data fuels bets the US Fed will need to raise rates again.</p><p>But first, the overnight <a href="https://www.globaldairytrade.info/en/product-results/" target="_blank"><strong>dairy auction</strong></a> was a reprise of the previous two, up another +4.3% this time. But to be fair it hasn't yet made back all of its steep falls of July and August yet even if it is on the way. Both SMP and WMP rose like the overall result, butter was up +2.9%. Prices at this level are basically what we had in the 2016-2020 period. It was <a href="https://mcusercontent.com/b8a03199b83b7d3f31d0f2086/files/beab0e0b-adc5-b79e-8da4-79bc95d25e8f/GDT_342.pdf" target="_blank"><strong>a solid, average auction</strong></a>, and a relief that the steep reductions from the 2021 peak seem to have ended.</p><p>In the US, <a href="https://www.census.gov/retail/marts/www/marts_current.pdf" target="_blank"><strong>retail sales</strong></a> came in stronger than expected. They were up +0.7% in September from August, following an upwardly revised +0.8% rise in the prior month and beating forecasts of a +0.3% rise. Gains were across the board, and car sales topped other sectors. Year-on-year that is a +3.8% rise and now topping inflation (3.7%). The data continues to point to healthy consumer spending despite high prices and borrowing costs.</p><p>This is all confirmed with much better bricks & mortar retail sales, up +4.6% year-on-year in <a href="https://www.redbookresearch.com/" target="_blank"><strong>the Redbook weekly survey</strong></a> of same-store sales last week.</p><p>US <a href="https://www.federalreserve.gov/releases/g17/current/default.htm" target="_blank"><strong>industrial production</strong></a> is again expanding too, up +0.3% in Sept