Wind’s out of sales
January retail sinks amid high inflation, debt
Retail sales in January plummeted the most in nearly a year — raising concerns that shoppers may finally be buckling under the weight of stubbornly high inflation and record creditcard debt.
The Commerce Department’s Census Bureau on Thursday reported that retail sales fell a worse-thanexpected 0.8% last month — after December’s numbers were revised down from 0.6% to 0.4%.
Economists had forecast retail sales — mostly goods and not adjusted for inflation — to dip just 0.1%.
The unexpected monthly decline was the worst since last March and dragged yearover-year retail sales down to just 0.6% — the worst since COVID lockdowns took hold in May 2020.
“From this report, we see that consumers are likely becoming more price-conscious and perhaps this is the first sign that the spending splurge is nearing the end,” Jeffrey Roach, chief economist for Charlotte, NC-based LPL Financial, told The Post on Thursday.
Some economists had cautioned not to read too much into any sharp drop in retail sales.
“The weather weighed on consumer spending in the month, but consumer spending should bounce back quickly,” said Bill Adams, chief economist for Comerica Bank.
Nevertheless, Americans whose bank accounts swelled from COVID stimulus checks could also be tapped out as they collectively owe $1.13 trillion on their credit cards, with the average balance soaring to $6,360 per consumer — both historic highs.
Paying down those balances may prove difficult. The average annual interest rate on most cards has spiked to nearly 23% as the Federal Reserve continues to keep its rates at a two-decade high in an effort to tamp down inflation.
The troubling retail sales data follows Tuesday’s hotter-than-expected CPI gain of 3.1%.
“Stripping out automobiles, gasoline, building materials and food services, socalled core retail sales decreased 0.4% in January.
“Investors were expecting modest growth in core retail sales, but instead saw a month-over-month decline,” Bret Kenwell, an investment analyst at eToro. “This complicates things for investors looking for clarity around the Fed’s first rate cut.”