By Barbara Marcolini
After a disappointing holiday season, Americans started 2016 spending a little more – just enough to put away fears of a recession.
Retail sales were 0.2 percent up in January, maintaining December’s pace of growth, which was revised upward to 0.2 percent from -0,1 percent. Both numbers were adjusted for seasonal variation.
January’s indicator was bolstered by auto sales and food retailers, which were up 0.8 and 0.6 percent from last month, respectively.
As oil prices continued to drop, gas stations found the worst scenario, falling 3.1 percent when compared to December. The plummeting is even higher on a year-to-year basis: -8.1 percent compared to January 2015. Friday’s average price for one gallon of gas was $1.80, the lowest in the past seven years.
“It’s good news to have a positive number, particularly now, when there’s so much concern that the economy would be under recession,” said Hugh Johnson, chairman and chief economist at Hugh Johnson Advisors. “Gasoline stations were down sharply because of the oil prices, but we had good numbers pretty much across the board.”
Eight of the 13 major categories showed increases. The second highest drop was in the sector of sporting goods, hobby, book and music stores, which declined 2.1 percent. But the category experienced a remarkable growth of 9.1 percent from January of 2015.
December’s numbers, which were revised from a low of -0.1 percent to a high of 0.2 percent, also helped to calm down fears of a shrinking economy. But savings with lower gas prices haven’t been spent in other sectors, which indicates that consumers are still somewhat apprehensive.
“Gains in consumer spending are likely to slow down in the coming months,” said Johnson.
The rise on auto sales was within the market’s estimates. The sector released its numbers last week and showed a strong recovery, with an annual selling rate of 17.6 million.
“Consumer spending has been supporting the domestic economic growth in the face of commodity and currency headwinds,” wrote Dana Saporta, director of US Economics Research at Credit Suisse.
The National Retail Federation expects sales to grow by 3.1 percent in 2016 (excluding automobiles, gas stations and restaurants). In a forecast released on Wednesday, NRF Chief Economist Jack Kleinhenz pointed out that, despite the volatility, the economy is showing strength as the unemployment rate falls and wages rise.
“Lower gas prices are creating more discretionary income to save, pay down debt and spend on travel, eating out and personal services,” Kleinhenz said.