WASHINGTON – The Commerce Department releases retail sales data for January on Thursday at 8:30 a.m. Eastern.
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BIG GAIN LIKELY, EXCLUDING GAS: Tumbling gas prices likely held back overall retail sales for a second straight month in January. Economists forecast that retail sales dropped 0.5 percent, according to a survey by FactSet. That would follow a 0.9 percent drop in December.
But analysts are optimistic that Americans spent much of the savings from cheaper gas on other goods. Economists at IHS predict that excluding autos and gas, sales rose a decent 0.6 percent in January.
The retail sales report is closely watched because it is the first official read on consumer spending each month. Retail sales comprise about one-quarter of consumer spending, with the rest spent on services.
RESURGENT CONSUMER: American shoppers are benefiting from several trends that are putting more money in their wallets: Businesses are hiring at the strongest pace in nearly 20 years. Gas prices have plummeted. And there was even a hint of higher pay in January's monthly jobs data.
Consumer confidence has surged in response, reaching the highest point in seven years in January.
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Higher confidence usually translates into more spending, though that didn't happen in December. Sales dropped 0.4 percent that month in a category that excludes gas, autos, building materials and restaurants. Economists track that category because it provides a better read on consumer demand.
The December drop may have reflected a pull-back after a healthy gain in November. Overall, consumers ramped up their spending in the October-December quarter by the most in nine years.
Economists expect that healthy pace of spending to continue this year, and power the economy to a 3 percent growth rate for the first time in a decade.
Gas prices nationwide fell for 123 straight days to nearly a six-year low of $2.03 a gallon in January, according to AAA. That was the lowest in more than five years. Pump prices have since risen to $2.21 a gallon, but that is still $1.10 cheaper than a year earlier.
Meanwhile, healthy hiring has meant that 3.2 million more Americans are earning paychecks than 12 months ago. Employers added more than 1 million jobs from November through January, the strongest three-month pace since 1997. And average hourly pay rose 0.5 percent last month, the most in six years, the Labor Department said Friday. While economists cautioned against reading too much into one month's figure, it suggested employers may be starting to raise pay.