Economic Watch: Retail Sales Jump But Price Pressures Building
Retail sales, one of the largest drivers of the U.S. economy, advanced in January, pointing to increased overall growth in the first quarter of the year. At the same time, prices on the retail and wholesale level posted big gains, and the manufacturing component for industrial production ticked higher.
Retail sales rose 0.4% in January from the month before, according to the Commerce Department, while the December level was revised upward for a 1% increase rather than the originally reported 0.6% gain.
This latest hike was better than a consensus estimate by analysts. Except for auto dealers, every major retail sector reported better January sales, according to MarketWatch.
So-called core retail sales, which exclude sales of autos, gasoline, building materials and food, posted a 0.4% increase in January, the same as December’s upwardly revised rise. Compared to the level from January 2016, sales were up 5.6%.
This better than expected start of the year is going to add some credence and support to the strong recovery in consumer confidence we have seen since the presidential election, according to Eugenio J. Alemán, senior economist at Wells Fargo Securities.
“This could reinforce our view that consumer demand will remain the pillar for economic growth during this year and would probably remain strong next year if some of the tax reduction proposals from the new administration come to fruition,” he said.
Alemán noted retail sales have been relatively weak during each first quarter of the year since the recovery from the Great Recession, looking only relatively strong in the face of an even weaker performance from the rest of the components of GDP during the same period of time.
“In fact, if it were not for the U.S. consumer, the U.S. economy’s weak performance would have been even worse than it has been so far,” he said.
Retail, Wholesale Prices Post …Read the rest of this story
