January Retail Data: The Consumer Generally Keeps Chugging Along

By at 14 February, 2020, 12:26 pm

by Raymond J. Keating-

The economic growth experienced over the past year largely has rested on the shoulders of the consumer, given the stall or decline in private investment and in trade.

That’s a dicey scenario, considering that consumers take their cues from how much business is investing and hiring. Hiring, of course, has remained solid, thankfully. Though eventually, a lack of investment and growth in trade will eventually funnel negatively into job creation and consumer spending. Hence, it’s crucial that we see a reacceleration of growth in business investment and trade.

But for now, the consumer generally keeps chugging along – though with some concerns. That was largely evident in the retail sales data released by the Census Bureau on February 14.

Retail and food services sales increased by 0.3 percent in January over December, and compared to a year earlier, were up by 4.4 percent.

There was weakness, though, if we just look at retail trade sales, which was up by only 0.1 percent in January vs. December, and up by 4.0 percent compared to a year earlier.

For good measure, as noted in the following chart, retail and food services sales have shown a general slowing in recent months.

Source: Federal Reserve Bank of St. Louis, FRED

Robust, sustained economic growth needs to be led by expansive entrepreneurship, investment and trade, which, in turn, takes the consumers along. U.S. policymaking needs to incentivize such critical undertakings via, for example, permanent and substantive tax and regulatory relief, advancing free trade, and reining in government spending.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

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