January Retail Sales Show First Decline in 11 Months

U.S. retail sales unexpectedly fell in January, recording their biggest drop in nearly a year. According to CNBC, The Commerce Department said on Wednesday that retail sales decreased 0.3 percent last month, the largest decline since February 2017. Data for December was revised to show sales unchanged instead of rising 0.4 percent as previously reported. There was good news to report as well. Consumer spending, which accounts for more than two-thirds of U.S. economic activity, was reported to have increased at a 3.8 percent annualized rate in the fourth quarter. Furthermore, the economy grew at a 2.6 percent pace in the final three months of 2017. Lastly, the National Retail Federation (NRF) reported that January’s retail sales increased 5.4 percent year-over-year. A drop from December’s strong close to the holiday season was to be expected.

Total Retail’s Take: On the surface this seems like bad news, and while not ideal, it’s normal for sales to drop in January following the end of the holiday shopping season. “These numbers reinforce a positive start to 2018 that reflects ongoing consumer optimism brought about by solid economic fundamentals,” NRF Chief Economist Jack Kleinhenz said in a company press release. “Consumer spending continues to grow at a steady pace and is showing year-over-year increases across almost all retail sectors. Employment has increased, labor markets are tightening and wage growth is on the rise. Stock market headlines are a concern for some shoppers, but households have the wherewithal to spend, and the tax cuts consumers are now seeing in their paychecks will bring an added boost.”