A Commerce Department report on Friday said consumers cut their spending significantly in January, indicating a potential weakening of economic growth ahead.
Retail sales slipped 0.9% that month from a 0.7% increase, up 0.7% in December, but Dow Jones was even worse than estimates with a 0.2% drop. Total sales are adjusted for seasonality, but for a month, prices rose 0.5%, not inflation.
Excluding cars, prices fell 0.4%, and also fell sufficiently from consensus forecasts of an increase of 0.3%. The “control” measurement, which divides some non-essential categories and numbers directly into gross domestic product calculations, fell 0.8% after a 0.8% increase upward.
Consumer spending accounts for about two-thirds of all US economic activity, so sales indicate a potential weakening of first quarter growth.
Sporting goods, music and bookstore receipts fell 4.6% that month, while online outlets reported a 1.9% decline, while automobile and parts spending fell 2.8%. Gas stations, along with both food and drinking facilities, reported an increase of 0.9%.
Stock market futures took place in slightly negative territory after release, but the Treasury will give birth to lost ground. Traders raised a bet in June that the Federal Reserve could quickly cut interest rates again.
“The drop was dramatic, but some mitigation factors indicate that there is no cause for alarms, some of which can choke up to bad weather, and due to incentives from fat sellers, this December After an extraordinary surge, there are a few things in tanking car sales in January.” Robert Frick, corporate economist for the Navy Federal Credit Union. “The rolling average of consumer spending remains strong, especially given the strong revision of December,” Flick added.
Inflation is ahead of the Fed’s 2% target. The Consumer Price Index recorded an increase of 0.5% in January, showing an inflation rate of 3% per year. However, the producer price index, which is a proxy for wholesale prices, showed some softening at the main pipeline input.
In other economic news on Friday, the Bureau of Labor Statistics reported that import prices accelerated 0.3% in January, in line with expectations for the largest month’s move since April 2024. Import prices increased by 1.9% year-on-year. .
Fuel prices increased by 3.2% a month, making it the biggest profit since April 2024. Food, feed and beverage costs increased by 0.2% due to a 3% surge in December.
Export prices also rose, rising 1.3%.
