US Retail Sales: Not a Repeat of 2001

February 13, 2008

US consumer spending snapped back in the month of January, skirting a repeat of 2001. The market had expected a back to back decline in retail sales, but the last time this happened was in December 2001. Since then, consumer spending has rebounded every month after a decline and this continued to remain the case in the first month of 2008. Retail sales increased 0.3 percent last month following a 0.4 percent drop. Excluding autos, sales were up 0.3 percent as well thanks to increases in gasoline prices, stronger demand for clothing and health care. However not all businesses saw stronger spending. Furniture, electronics, building equipment, sporting goods and department stores all reported sharp declines.

The data was positive for the dollar against the Japanese Yen, but that was it. The dollar remained unchanged against the rest of the major currencies such as the Euro and British pound.

The latest consumer spending number helps to alleviate the doom and gloom scenario for the US economy but retail sales is rising from low levels, which means that the US is far from hitting a bottom.

Posted in US Dollar, US Economy, retail sales