After a plunge in consumer spending in December, retail sales bounced back strongly in January. A 3.8% increase in retail sales beat the 2.1% Dow Jones estimate. Consumer spending in January was propelled by receding omicron worries and a post-holiday season surge in demand.
Despite multi-decade high inflation, consumer spending has not slowed due to massive savings, rising employment, and increased household wealth. Even after recording low sales in January, retail sales were driven by rising automobile purchases. Motor vehicle and parts dealers saw a 5.7% rise in sales last month. Sal Guatieri, Senior Economist at BMO Capital Markets, said, “The strong rebound in January retail sales, though partly in response to last year’s weak finish and inflated by higher prices, suggests consumers still have plenty in the tank to propel the expansion forward this year.”
