U.S. retail sales rebound slightly in January

In January, retail sales in the USA rebounded slightly, and this after the biggest decline in a decade. The 0.2% gain in January was led by sales on the Internet and in home centers.  It remains clear, however, that the US economy was losing momentum in early 2019.

The report that retail sales has increased a meager 0.2 percent in January came from a government report that was delayed by the partial federal shutdown earlier this year.
That same report showed that sales had tumbled 1.6 percent in December 2018, constituting the largest drop since late 2009, when the US was exiting the 2007-09 recession. In its preliminary report, the government had reported a 1.2 percent decline for December 2018.

Reuters quoted Douglas Porter, chief economist at BMO Capital Markets in Toronto, saying that “…sales managed only a tepid reversal in January from December’s deep freeze. While we expect some further comeback in the next couple months, the big story is that the economy’s big engine is cooling.”

Reuters reported further that the reported drop in sales in December was still “viewed with suspicion by many economists in light of other retail-industry reports such as Redbook that suggest sales were much better than the government reported.”

While consumer spending increased at a 2.8 percent rate in the fourth quarter and rose modestly during the first three months of the 2018 as the result of a $1.5 trillion tax cut package. For 2019, the forecasts are reserved, also because on average tax refunds for 2018 have been smaller than in previous years. On the other hand, spending is supported by strong wage growth and higher consumer confidence. The government reported an annual wage growth increase of 3.4 percent in February, the biggest gain since April 2009, from 3.1 percent in January.