In January, retail sales rose .4% to $401.4 billion, according to today's Commerce Department report. This was a healthy 5.8% increase over last year. However, the investors had expected a .8% increase. The Dow Jones Industrial Average dropped .3% as a result.
However, most of the drop was due to declines in just a few sectors. Auto sales were down 1.3% in January, while online stores saw a 1.1% drop. Other areas that took a hit were furniture stores (down .2%) and health/personal care stores (down .3%).
Other retailers had reason to be more optimistic. General merchandise stores were up 2%, while department store sales were up 1%. Sporting goods and hobby store sales were up 1.3%, while electronics and appliance store sales rose .5%.
Gas stations saw a 1.4% increase, but that was driven by higher gas prices. In fact, gas prices are rising faster than last year. National gas prices are already above $3.50 a gallon, and could break $5 a gallon this summer, according to an article in the Drudge Report.
Grocery store sales were up 1.3%, while restaurants and bars saw a .6% increase. (Source: U.S. Commerce Dept, "U.S. Retail Sales," February 14, 2012)
What It Means to You
Higher retail sales means consumer spending will continue to drive 70% of the economy, as measured by GDP. Pay attention to year-over-year figures, as this is how GDP is measured. Since retail sales were up 5.8% since last year, this means first quarter economic growth will also be positive.
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