The dollar volume of U.S. retail sales last month shot up 3 percent from December’s total, according to the U.S. Census Bureau, beating analysts’ prediction of a 1.8-percent rise.
Consumers especially boosted their spending on appliances, clothing, and other department store items, furniture, restaurant meals, and vehicles.
Spending at bars and restaurants jumped 7.2 percent, the greatest monthly increase since March 2021.
January sales rebounded from a slump in November and December, the latter of which posted the biggest month-to-month drop since December 2021.
However, the sales figure was not adjusted for inflation, which ran at a 6.4-percent annual rate in January. And when adding the true number of inflation at 14.42 percent according to John Williams Shadowstats, Americans spent a lot more to buy a lot less. And, producer prices were stronger than expected in January, as we report in “Wholesale Inflation Stronger in January Than Predicted” in this issue.
Therefore, consumers bought fewer goods and services even though they spent more money to do so.
In January, prices for goods rose 1.4 percent from December, while prices in the services sector jumped 7.2 percent on strong demand.
The spending bump prompted the Federal Reserve Bank of Atlanta to revise its first-quarter GDP outlook from 2.2-percent growth to 2.4 percent.
TREND FORECAST: With the Bankster’s key federal funds rate standing at 4.5 to 4.75 percent, there is already a marked slowdown in consumer spending as we detail in ECONOMIC UPDATE, in this issue of The Trends Journal. Again, it takes several months for rate hike damage to work its way into the economy and now it is being felt. Therefore, the higher interest rates rise, the deeper the economy and equities will sink.