US retail sales declined 0.9% in January, worse than expected, as consumers cut back on spending. The drop was more severe than the Dow Jones estimate of a 0.2% decline and marked a reversal from December’s upwardly revised gain of 0.7%. Excluding autos, prices fell 0.4%, missing the consensus forecast for a 0.3% increase.
The sales data indicates potential weakening in economic growth ahead, with consumer spending accounting for two-thirds of US economic activity. Receipts at sporting goods, music, and book stores plummeted 4.6%, while online outlets declined by 1.9%. Motor vehicles and parts spending dropped 2.8%.
Gas stations and food establishments saw increases, but the overall picture is one of caution. Traders expect the Federal Reserve to cut interest rates again as soon as June.
Inflation remains above the Fed’s target, with a 0.5% gain in consumer prices and a 3% annual inflation rate. The producer price index showed some softening in key pipeline inputs. Import prices accelerated by 0.3%, in line with expectations for the largest one-month move since April 2024.
The Commerce Department report suggests economic growth may be slowing, which could have implications for the first quarter. As one economist noted, while the retail sales data was concerning, it’s not necessarily a cause for alarm, given the mitigating factors such as bad weather and auto sales adjustments.
Source: https://www.cnbc.com/2025/02/14/retail-sales-slumped-0point9percent-in-january-down-much-more-than-expected-.html