Retail sales advanced for the third month in a row in January despite the increase in payroll taxes at the start of the year, but the small gain after two strong months may be evidence that the consumer is not ready to lead the economy higher in the first quarter.
Purchases rose 0.1%, equaling the median prediction in the Reuters poll of analysts according to the Commerce Department in Washington D.C. today. Sales had increased 0.5% in November and December. There was little forex market reaction to the numbers.
Retail sales figures are not corrected for price changes. Inflation is forecast to have been 0.1% January, the actual figure will be released on the 21st of this month. Though the two statistics are compiled from different data sets, the largest part of the 0.1% sales gain in January is simply price increases.
Core sales, that is spending minus automobiles, gasoline and building products, which is closest to the consumer spending component of GDP also rose 0.1% in January after a 0.7% gain in December.
This performance, likely dragged down by taxes and higher energy prices, indicates that the weak economic growth of the fourth quarter probably continued into the New Year. Consumer spending accounts for about 70% of U.S. economic activity and it expanded at a 2.2% annual pace in the fourth quarter.