Data released today showed a rebound in US retail sales in January after the worst numbers since 2009 seen in December. According to analysts from Wells Fargo, the rebound was not enough to offset the decline. They see consumer spending rising below 2% during the first quarter.
“After 2018 ended with a thud, retailers cleaned up the holiday displays and pushed forward into the new year. We already knew going into today’s report for January retail sales that the prior month’s report was ugly.”
“There was clearly a bounce in January, but not enough to completely alleviate concerns about the ability of the consumer to drive growth in a meaningful way in 2019.”
“The December drop in retail sales was the worst since 2009, and other details were worse. Control group retail sales strips away food, autos, gas and building materials and serves as a good proxy for personal consumption in the GDP report.”
“So why was December so awful for retail sales? There was no obvious culprit from a store category standpoint. There were broad declines in most categories up to and including online retailers, which have been known to swim against the stream and post a gain even in months where brick and mortar stores struggled. Non-store retailers, as they are called in the report, fell 5.0% in December””the worst month for online sales since January 2001 and the worst December on record.”
“First quarter spending is dented. We are likely looking at a 1 %-handle on real PCE growth. But in our view this is not the beginning of a serious retrenchment in which consumers go into hiding.”