Retail sales fall 0.8% in January from December as shoppers pause after strong holiday season
Americans pulled back their spending in January after splurging during the holiday season
NEW YORK — Americans pulled back their spending more than expected in January after the traditional holiday season splurge.
Retail sales fell 0.8% in January from the strong pace in December when they rose a revised 0.4%, according to the Commerce Department's report on Thursday. Excluding sales at auto dealerships and gas stations, sales were down 0.5% for the month. The decline was bigger than the 0.10% drop that economists projected and marked the lowest monthly figure since March of last year.
Economists attributed part of the pullback to snowy weather conditions, but they also said the slowdown shows that shoppers may finally be buckling under higher interest rates and other financial hurdles and that the economic momentum from the end of 2023 could be starting to fade. Consumers account for roughly two-thirds of economic activity.
Excluding sales of autos, gas, building materials, and restaurant meals, the so-called control group of sales — used to calculate economic growth —fell 0.4% in January. Economists expected an increase.
The retail sales report could offer positive news that the Federal Reserve could finally start to cut rates, bringing relief to shoppers and businesses seeking lower rates for borrowing.
“Real consumption appears to have declined in January and, even allowing for a recovery over February and March, growth will slow sharply in the first quarter,” wrote Andrew Hunter, deputy chief U.S. economist at Capital Economics, in a report. “The upshot is that Fed officials may not need to worry much longer about the possibility of continued economic resilience reigniting inflation.”
Despite higher borrowing
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