(Photo: REUTERS)
The Commerce Department said Thursday retails fell more than expect in January, with weak U.S. consumer spending indicating slower first quarter growth. American households are not spending whatever increased disposable income they have resulting from the 39.5 percent decline in gasoline prices since June,
Excluding automobiles, gasoline, building materials and food services, spending ticked up by just 0.1 percent last month following a revised 0.3 percent drop in December.
The so-called core retail sales correspond most closely with the consumer spending, which accounts for more than two-thirds of U.S. economic growth (GDP). The increase in core retail sales was less than median economists’ expectations for a 0.4 percent increase.
Economists say American households are using the extra income from gasoline to pay down debt and increase their savings. Declining gasoline prices naturally hurt sales receipts at service stations, which saw a 9.3 percent decline, the biggest fall since December 2008.
Falling gasoline receipts combined with a 0.5 percent drop in automobile sales sent overall retail sales down 0.8 percent in January, marking the second straight monthly decline.
Consumer spending grew at its quickest pace since 2006 in the fourth quarter, but is now the latest indicator of slowdown in U.S. economic growth. But the lack of growth in wages may have more to do with the lack of spending than previously anticipated. While the economy has added more than a million jobs over the past three months, or numbers not seen since 1997, job creation quality is stunningly poor.
In a survey published Thursday, a whopping 65 percent of Americans say the U.S. is still in a recession. With more disappointing data rolling in, more and more economists are beginning to raise concerns the public may be on to something, as they typically are ahead of the economic cycle.
In January, core retail sales were sliced by a 0.7 percent drop in furniture and home furnishings sales, the biggest decline in this category since December 2013.
Receipts at clothing stores fell 0.8 percent, while sales at sporting goods stores were down 2.6 percent, their biggest drop in a year. Receipts at online stores rose 0.5 percent, while sales at electronic and appliance stores gained 0.3 percent.
