Solid US retail sales add to signals that the economy keeps momentum at the start of the year into 2024

US retail sales rose more than expected in December, boosted by an increase in motor vehicle and online purchases, keeping the economy on solid ground heading into the new year.

Retail sales rose 0.6% last month after an unrevised 0.3% gain in November and above forecast for 0.4% gain.

Annualized retail sales increased 5.6% on a year-on-year basis in December, compared to 4.0% rise previous month.

Solid numbers prompted economists to upgrade their economic growth estimates for the fourth quarter and adds to expectations that the Federal Reserve would start cutting interest rates in March.

The data released earlier this month, pointed to strong employment, wage growth and a pickup in consumer prices in December, contributing to signals that the economy is on strong footing which gives the Fed more space to move carefully and methodically on monetary policy.

Recent economic data also contribute to fading fears of recession and economists see current condition of the US economy as optimal for rate cuts in 2024.