Monthly % Change, Seasonally Adjusted
Retail sales rose a disappointing 0.3 percent in January compared with December while core sales, which exclude vehicles and gasoline, increased 0.2 percent. The weakness stemmed from the terrible weather across most of the country last month. Subtracting the weather-induced decline of 2.9 percent at building supply stores, total sales gained a solid 0.6 percent. Consumers have come in from the cold in recent months, pushed by pent-up demand that developed during the recession and pulled by weak pricing power on the part of retailers. The personal saving rate, which fell below 1 percent during the bubble years and shot above 8 percent during the recession, has leveled off in the range of 5 to 6 percent – a compromise consumers are making between reducing debt and spending for necessities. Encouraged by the cautious return of consumers, retailers are repositioning and expanding selectively to take advantage of bargain rents offered by landlords. Gradual improvement in the labor market this year will provide a tailwind for retail sales, but the weak housing market and, more recently, rising energy prices will keep gains modest. Energy prices are being pushed higher by the recovering global economy and political turmoil in the Middle East. If prices continue to spike, it would have a pernicious effect on retail sales and inflation.
Source: Census Bureau, Grubb & Ellis