The bad weather didn't keep all Americans from shopping in January. U.S. sales for retail and food services rose for the seventh month straight to $381.6 billion, according to the Census Bureau. That's a 0.3% increase compared to December, and a 7.8% jump from a year earlier. It also set a new high, breaking the previous best set in December. These numbers continue to suggest that American consumers are slowly getting more comfortable spending again.
Let's start with the historical chart:
It's hard to see the detail here, but in January total sales increased by $1.3 billion, which amounts to 0.3%. That's the smallest increase since sales declined in June. It also missed expectations of sales rising 0.6%.
A few things could be going on here. First, the brutal January winter weather could have had an impact. Although bad weather more often delays sales than eliminates them altogether, it's possible that some purchases were put off and missed January as a result.
Second, there could be a spending spree hangover from holiday shopping that dampened additional purchases in January. Although the numbers are already seasonally adjusted, it's possible that in this economic environment Americans' fairly aggressive holiday shopping led to weaker than expected sales growth in January.
Often people looking at these numbers complain about rising gas and food prices, since inflation is not taken into account. Did they have a significant effect? Let's take out gasoline, food and beverages stores, and food services and drinking places. Here's how the chart looks without those factors:
As you can see, the trend remains mostly intact. Now the increase for January is just 0.2%, however. Food and gasoline accounted for $887 million additional sales in January, about 69% of the $1.3 billion increase. So food and gasoline did have a significant effect in the sales growth, but they can't explain all of it. And remember, despite higher food and gasoline prices, retail sales still increased for other products, which means that Americans aren't cutting their spending in those other areas in response to the commodity price inflation.
Let's look a little more closely product-by-product:
The results are pretty mixed, so it's hard to say anything concrete about spending trends within specific goods here. The decline in furniture and building and gardening materials could be a symptom of a still slow housing market, however.
Even though today's data missed expectations, it continues to indicate that the recovery is moving forward. As long as consumer spending increases, we can gather that Americans are feeling more and more comfortable with their fiscal status and don't mind making more purchases than they did in prior months. And remember, this is happening in spite of 9% unemployment. As new jobs are created, sales should increase even more, as the newly employed will have paychecks to spend.
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