US retail sales decline despite consumers saving more on gas costs
The US retail sales continued the slide in January as consumers tightened their wallets despite saving money on the gas costs. As the gas prices dropped and auto sales also weakened, the retail sales remained low during December and January.
However, Americans cranked up their spending to some extent in consumer durables and other retail categories, apart from those volatile categories. According to the Commerce Department, in January, retail sales declined 0.8% after a 0.9% decrease in December.
The dollar value of gas station sales declined 9.3%, which is the largest decrease in six years. And auto dealer sales also dropped for the second consecutive month after big increases in the fall. Sales increased 0.2% after a flat reading in December, outside these categories.
The modest gain indicates that Americans are still careful regarding spending their windfall from lesser gas prices, which as per economists will save the typical family $750 this year. Strong hiring and cheaper gas have increased consumer confidence, and this indicates that expenditure should increase soon.
The weak showing dissatisfied economists, however the majority anticipate that consumers will ultimately expend much of the extra cash left over from lesser prices at the pump.
"With lower gasoline prices leaving households with more to spend ... the labor market on fire and consumer confidence back at its prerecession level, we had hoped to see a much stronger performance", said Paul Ashworth, an economist at Capital Economics.
Ashworth anticipates that growth in the first three months of this year will be only 2.5% to 3%, less than 3% or above, he expected earlier. He said that the conditions are in position for a period of very strong consumption growth and they still anticipate the strength to soon come through the retail sales data.
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