U.S. retail sales rose a bit in January, evidence that Americans kept spending even though the stock and commodity markets have been volatile and generating worrying headlines.
Friday’s report from the Commerce Department says retail sales rose two-tenths of a percent last month. Government experts also revised the prior month’s sales figures upward as more complete data became available.
Economists and investors watch retail sales closely for hints about the consumer demand that drives most U.S. economic activity.
Positive fundamentals
Gus Faucher, an economist at PNC Bank, says retail sales figures went up even though plunging gasoline prices reduced the value of sales at service stations. Gasoline prices have fallen seven cents a liter (27 cents a gallon) and are now about 45 cents a liter ($1.70 a gallon).
He says the “fundamentals for consumer spending are very good” because low energy prices leave consumers with more money to spend, job growth has been averaging over 200,000 per month over the past year, and wages are rising as the labor market tightens. PNC experts predict the U.S. economy will expand 2.3 percent this year, slightly less than in 2015.
A separate analysis from Wells Fargo economists is in general agreement with PNC, and says today’s data is likely to translate into very strong consumer demand.
Friday’s U.S. retail sales data, and some mostly positive news on European economic growth, helped U.S. and European stock markets rebound from multi-year lows in recent trading.
