There’s good news out this morning: Retail sales in January rose a healthy 0.5%, which is a nose ahead of the consensus expectation (collected by Dow Jones) for a 0.3% rise. There was also a slight upward adjustment in December’s number, where the decline was shaved from -0.3% to a more neutral -0.1%. These numbers may not be the stuff of roaring recovery but they feel sweet indeed compared to the dreadful news coming out of the European sectors, and also from Japan.
But are the latest numbers a reliable indicator of improving economic conditions? Auto sales didn’t really account for the boost (maybe it was the Toyota chill), and food and gasoline sales gains were barely noticeable. But core sales–think retailers with big SALE signs in their windows– were up a cheery 0.6%. Can this be the real stuff of recovery? Ian Shepherdson over at High Frequency Economics is more impressed with the quarterly trend but even that leaves him less than comfortable:
The monthly numbers are volatile;
what counts is that Q4 core sales rose at a 5.9% annualized rate,
compared to 2.2% in Q3 and a 4.2% drop in Q2. This pace is most
unlikely to be maintained, though, because peoples’ cashflows are
surely not enough to support it, and access to credit remains severely
constrained. Still, for now this is a decent start to Q1; we expect
real spending for the quarter to rise at a 2% annualized rate.