Y'all spent a lot in December. From Marketplace, I'm Sabrie Benashore, and for David Brancaccio.

Sales in retail and food services rose six-tenths of a percent in December. They rose five and six-tenths percent from

December of the previous year. Let's talk about what that means with Susan Schmidt,

head of Public Equity at the State of Wisconsin Investment Board. Hi Susan

Good morning. So 5.6 percent year-old. at the state of Wisconsin Investment Board. Hi, Susan.

Good morning.

So 5.6% year over year increase in retail sales.

It's higher than expected.

It's also higher than inflation.

So it's not just that we spent more we actually we actually bought more.

We did actually buy more and remember the American consumer has stayed very strong throughout

this. That's one of the reasons the Fed should still be concerned about where we are with inflation.

Retail sales were higher than expected.

Consumers were out spending.

Remember that the more we spend means that there's more demand and more demand means

that the prices of things go up. So do markets think, do you think, this number

means that the fight against inflation is not as over as many people thought it might be?

Investors are certainly going to interpret it that way. In December, the thing came out with their announcement and the investors took that to mean that interest rates would start being lowered at some point in 2024.

I think investors were overly optimistic in December, hoping those interest rates would begin as early as the spring of 24. This data is very

different. It shows that there's still a lot of strength in the buying base of

a consumer and that means that the inflation battle isn't over yet. These higher

prices are what is

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