January saw a sharp pullback in consumer spending, suggesting a potential slowdown in economic growth, according to a Commerce Department report released Friday. Retail sales dropped 0.9% for the month, following an upwardly revised 0.7% gain in December.. Much worse than the expected 0.2% dip. These figures are adjusted for seasonality but not inflation, which rose 0.5% during the month.
Excluding auto sales, retail spending fell 0.4%, missing the forecasted 0.3% increase. A critical “control” measure, used to calculate GDP by stripping out nonessential categories, dropped 0.8%, erasing the previous month’s 0.8% gain.
Since consumer spending accounts for about two-thirds of U.S. economic activity, this decline raises concerns about weaker growth in the first quarter.
Key Figures:
- Sporting goods, music, and bookstores: -4.6%
- Online retail: -1.9%
- Motor vehicles and parts: -2.8%
- Gas stations & food & drink: +0.9%
The data suggests consumer momentum may be fading, leaving myself and probably many others wondering how the economy will fare moving forward.
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