Retail sales in the US declined more than expected in January, dropping 0.8% from the previous month.
This was the steepest monthly fall in nearly a year and followed strong consumer spending through much of 2022.
The pullback was led by decreases in auto sales and gasoline spending.
Excluding autos, retail sales still fell 0.6%. Several categories like building materials and health/personal care also weakened.
However, restaurant sales continued growing.
The control group, excluding volatile items, pointed to sharp slowing consumption in Q1.
Navy Federal Credit Union corporate economist Robert Frick said, “It’s a weak report, but not a fundamental shift in consumer spending.”
While higher interest rates pose a challenge, analysts say a gradual moderation in spending is more likely than a collapse given recent gains in consumer confidence and excess savings diminishing rather than plummeting.
Pantheon Macroeconomics’ analysts reported, “Consumers’ spending was remarkably strong for much of last year, but some softening seems inevitable this year.”
“But a gradual moderation seems much more likely than a collapse, given the recent upturn in consumers’ confidence,” wrote the analysts.
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