Retail sales in the US fell the most in January in nearly two years. This suggests a sharp slowdown in economic growth at the beginning of the first quarter, following massive profits over the past four months, falling due to frigid temperatures and moderation.
The significant drop from retail sales forecasts reported by the Commerce Department on Friday was full. Economists speculated that rising prices and uncertain economic outlook are forcing consumers to tighten their wallet strings amid the chaos over tariffs on imports.
In anticipation of tariffs that increase the price of products, it has helped to increase retail sales in recent months. However, consumer sentiment has worsened, with one-year inflation expectations reaching 15-month highs in early February, with households saying “it may be too late to avoid the negative impacts of tariff policy.” It was recognized as the last time that the university showed. week.
“Maybe people are confused about the tariff talk and they’re not considering buying because they’re happening right away,” said James Knightley, ING’s chief international economist. .
“We’ll have to wait until February data to see if this is the beginning of a more cautious consumer trend or if it’s just a weather-related pullback,” he said.
Retail sales fell 0.9% last month, the largest decline since March 2023, after an increase of 0.7% in December.
The economists voted by Reuters predicted retail sales that were mostly products, not adjusting for inflation, and not immersed in 0.1%. Retail sales in January increased by 4.2% year-on-year. Much of the country was covered by snowstorms and freezing temperatures last month.
The California wildfires may have also damaged sales.
The 25% tariff on Mexican and Canadian goods was delayed until March. An additional 10% collection of goods from China was enacted this month.
Expenses were supported
After moving forward 0.9% in December, sales at car dealers fell 2.8%. Receipts at furniture stores fell by 1.7%, while receipts for clothing retailers fell by 1.2%.
Sales of sports goods, hobbies, musical instruments and bookstores plummeted 4.6%. Receipts at other store retailers, including gift shops and florists, rose 0.2%.
Online store sales fell 1.9%. However, receipts at foodservice and drinking places, the only service components of the report, rose 0.9% after a 0.1% increase in December.
Economists view diet as an important indicator of household finances. Construction materials sales fell by 1.3%. The freezing temperature was probably drag. Receipts at service stations rose 0.9%. Electronic store sales fell 0.7%.
Expenditure is supported by the resilience of the labour market, maintaining wage growth and steady economic expansion. The stock market has devoted some profits, but household wealth is at its highest thanks to high housing prices.
Retail sales, excluding automobiles, gasoline, building materials and foodservice, fell 0.8% last month after being revised upwards by 0.8% in December.
These so-called core retail sales correspond most closely to the consumer spending component of gross domestic product. Economists had predicted a 0.3% increase in core retail sales following the previously reported 0.7% surge in December.
Robust consumer spending helped offset GDP drugs from inventory in the fourth quarter. The economy grew at 2.3% last quarter after expanding at a 3.1% pace in the July-September quarter.
