The only thing we learn from history is that we do not learn
The only thing we learn from history is that we do not learn. The biggest hiring increase in more than a decade and the lowest gasoline prices in four years are convincing US households to open their wallets, which means that the recent acceleration in economic growth can be sustained. We could be entering a bull phase for US consumer spending with a very strong Christmas giving the US economy strong momentum going into 2015. Last month's retail sales gain was the biggest since March and followed a +0.5% m/m in October, but the most significant change in the US labour market recently has been wages growth, and while its only one month of solid gains, it is the missing variable in what remains the weakest recovery in US history. But this strength will eventually come at a cost and that is higher US interest rates. Before we get all excited about US rate hikes there are a lot of disinflationary forces entering America in the next six months from lower gas prices, lower imports and the stronger US dollar.