Retail Sales Are A True Tell Sign Of The Economy

Investors were treated to some encouraging news Tuesday as core retail sales for July rose 0.50 percent month over month, which exceeded the 0.30-percent gain experts were predicting. While many investors are quick to brush off this data set as being non-important they may want to reconsider, at least according to BK Asset Management's Boris Schlossberg.

Retail sales data gives investors a good indication of how strong or weak the U.S. consumer is, Schlossberg explained during a recent CNBC "Trading Nation" segment. Tuesday's data release is particularly important because it also serves as an indication if the bottom half of 2017 will consist of a "big recovery for the U.S. economy" or if "we're just going to read water."

The "core" aspect of retail sales is particularly important as it doesn't include gasoline and automobile prices, which can skew the sales data and give a false impression of stronger numbers as the price of gas has increased lately, he noted. In fact, the strength in the "core" data could serve as the "exact kind of catalyst we need" to continue supporting the stock market's strong surge.

On the other hand, if the "core" data came in poor it would have been seen as a big disappointment for the market. Thankfully, this wasn't the case as the retail data showed the biggest increase in seven months and confirmed the economy continued to gain momentum.

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