Official January figures released this week showed U.S. retail sales up 3 percent. This marks the most important increase since March 2021 and reverses the 1.1 percent decline since late 2022. Department stores also posted a formidable 17.5 percent jump. This is remarkable, provided that the post-holiday shopping season is commonly characterised by low sales.
The New York Times reports consumer spending has contributed to the continued strength of the labor market. Wages are stagnant and individuals are in need of money. Simon Property Group – which runs shopping centers across the country – reported optimism about retailers’ performance. In a recent interview with an analyst, CEO David Simon said his company “rates our retailers very highly”. He reportedly also identified that colleagues when asked about signs of a retraction in consumer demand say it “hasn’t really happened.”
The Fed raised rates of interest in 2022 in a bid to curb the economy. Housing markets have cooled, but consumer spending appears to be declining as well. But recent retail sales may show that the Fed’s rate hikes haven’t affected consumer spending as much as some analysts feared.
Meanwhile, Fed officials have hinted that rates of interest may rise if inflation shouldn’t be curbed.
Other economists are skeptical about these latest retail sales figures, reports The Times. They consider they could be anomalous and brought on by exceptionally warm January weather. Sales could fall again as temperatures return to normal in the approaching months.
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