The Economy

U.S. Retail Sales Start Year on Strong Note

Spending rose a higher-than-expected 0.2% in January as shoppers apparently shrugged off stock market turbulence.
Matthew HellerFebruary 12, 2016

Stock market turmoil and economic instability apparently didn’t faze shoppers in January as retail sales rose more than expected, boosted by continuing low gas prices.

Spending at retail stores and restaurants rose 0.2%, ahead of the 0.1% increase predicted by economists surveyed by the Wall Street Journal, the U.S. Commerce Department said Friday. With December’s sales being revised higher, to 0.2% growth from an initially reported 0.1% drop, the January data mark the fourth consecutive month of higher retail sales.

Demand held up even after a winter storm moved through the Mid-Atlantic and Northeast regions late last month and, according to the Los Angeles Times, the spending uptick over the past two months could signal that consumers are ready to open their wallets after not splurging in the months leading up to Christmas.

Drive Business Strategy and Growth

Drive Business Strategy and Growth

Learn how NetSuite Financial Management allows you to quickly and easily model what-if scenarios and generate reports.

The National Retail Federation has reported that combined sales in November and December increased just 3%, below the original forecast of 3.7%.

“Consumer fundamentals still look very strong,” Bricklin Dwyer, an economist at BNP Paribas in New York, told Bloomberg. “We had really strong real incomes at the end of last year, and that’s going to feed through to consumption.”

Sales at bars and restaurants posted their biggest decline in two years in January, falling 0.5% on the month. But sales at food and beverage stores rose 0.5% and a measure of spending that includes online shopping grew 1.6%, the most in nearly a year.

As the WSJ reports, the early weeks of 2016 “were marked by wild swings in stocks driven by currency volatility in China and further drops in oil prices.” But that appears to have had little impact on U.S. consumers in January amid the ongoing low gas prices and low unemployment. In January, sales at gas stations fell 3.1%, and were down 8.1% from a year earlier.

Federal Reserve officials cited solid consumer spending in raising interest rates in December. The January data is likely to be welcomed by Fed officials as “evidence of the U.S. economy holding fast in the face of global market turmoil,” the Journal said.