Strong economic data is affecting inflation expectations.

After a month of mixed economic data, the news from last week was surprisingly strong. It was led by the retail sales data for January. Previously, sales had declined for three consecutive months as the virus continued to spread and keep people at home. They were reported as having increased by 5.3% for the month driving them up 7.4% year-over-year. The control group of this data that excludes autos, gasoline, food and building materials was up a huge 6.0%. This data makes up about one-third of the personal consumption expenditures number used to calculate GDP data. This huge start to the year means first quarter Real GDP forecasts will need to be revised upward.