Winter Doesn’t Freeze U.S. Retail
U.S. consumers didn’t let snow or frigid temperatures stop them from shopping in January. And if they couldn’t get to the malls, there was always the Internet.
Retail sales increased a larger-than-expected 0.5% last month, more than recovering a 0.1% loss of December. Sales might have increased even more if not for the lack of inventory. The latest retail data suggest real gross domestic product is on a solid track, even though February’s storms cut into business activity.
The January shopping gain was broad-based, with sellers of sporting goods, books and music, general merchandise stores and Internet retailers posting increases in excess of 1%. Internet sales have soared 12.4% over the past year.
Jared Franz, associate economist at T. Rowe Price, calculates that core retail sales — the data used for GDP and which exclude autos, building materials and gasoline — jumped 0.8% last month.
Even after accounting for giveback in snowy February, Franz projects real consumer spending is on track to grow between 1.5% and 2.0% this quarter. Since the consumer sector accounts for about 70% of real GDP, that solid rate sets a floor for total economic growth.
Part of the January increase reflected consumers redeeming gift cards received during the holidays, says the National Retail Federation. Gift cards were No. 1 on gift lists in 2009. In a survey done last November, American Express found that 58% of U.S. consumers planned on giving gift cards, with an average balance of $270. Past patterns show most cards are redeemed in January and February.
