Retail sales were down 0.8% in January after rising a revised 0.4% in December, a Commerce Department report shows. This marks the lowest monthly retail sales figure since March 2023 and is a bigger decline than economists had expected.
Spending dropped in nine of 13 categories tracked; however, restaurants saw gains, which indicates that people are still spending on services, analysts said.
Part of the drop could be due to snow, but it may also be due to higher interest rates and other financial challenges.
“Real consumption appears to have declined in January and, even allowing for a recovery over February and March, growth will slow sharply in the first quarter,” said Andrew Hunter, deputy chief U.S. economist at Capital Economics. “The upshot is that Fed officials may not need to worry much longer about the possibility of continued economic resilience reigniting inflation.”
