Retail Sales fell 0.8% from December to January, coming in well below forecasts and breaking a two-month streak of increases. Sales were 0.6% higher when compared to January 2023.
What’s the bottom line? After a strong holiday shopping season, spending declined in a variety of categories to start the year, including gasoline stations, home improvement stores and online retailers. Some of the pullback in January could be a natural lull in spending after consumers ramped up purchases and took advantage of holiday discounts late last year. The use of credit cards or buy now pay later programs could have also contributed to slow spending in January as debts are now being repaid.
The Fed will be watching this data closely, as the strength of our economy will impact their monetary policy decisions, and it will be important to see if Retail Sales pick up as we move ahead this year.