Sales Down For Second Consecutive Month
The Department of Commerce reported on Thursday
that retail sales fell 0.8 percent in January, more than the 0.4 percent decrease
expected by economists. That comes on top of a 0.9 percent drop in December.
So-called core retail sales, which exclude volatile items such as gasoline,
food, and autos, rose 0.1 percent. The Commerce report said that six of the 13
major categories were down in January.
There was some
surprise in the business media about the size of declines. While a sharp drop
in the value of gasoline sales, due to dropping prices, was expected to reduce
that segment, many analysts had expected consumers to turn around and spend
their gasoline savings elsewhere. However, that doesn’t appear to be happening,
and several economists interviewed in the media suggested that Americans seem
to be banking their savings.
Looking more
broadly, the weak January data led some firms to revise their estimate of Q1
GDP growth downward. Barclays cut its Q1 estimate from a 2.5 percent annual
rate to a 2.2 percent rate, while JPMorgan cut its estimate from 3.0 percent to
2.5 percent.
What This Means For Small Business:
A
significant percentage of small businesses are dependent on retail sales to
survive. Any prolonged weakness in such sales is bad news.
Additional Reading:
Bloomberg
News, the Christian
Science Monitor,
Reuters and the Wall
Street Journal
all report on the data and its implications.
This news article is intended to keep small business owners apprised of current events that may affect them. It does not necessarily reflect NFIB’s policy position on such issues.
