Retail and food sales made them The biggest monthly drop January since March 2023 marked the end of the purchase surge that began at the 2024 election stage.
The Census Bureau reported Friday that sales fell 0.9% from $700 billion in December to a seasonally adjusted $724 billion.
The 0.9% drop is well below expectations as economists predicted sales would fall by about 0.2% from their holiday highs.
The economists called the January figures a disappointment, but said they weren't too worried about the shortage. Sales over the past 12 months increased 4.2% compared to January 2024, surpassing the inflation rate, which rose to 3% in January.
“Retail sales disappointed the estimate, but following months of data, today's release is not a reason for concern,” wrote Lauren Saidel-Baker, an economist at research firm ITR Economics, in the commentary. . “Inflation generally remains a layoff pattern, but consumers are still healthy. Overall wage inflation still outweighs consumer price inflation and keeps consumers in a position to spend.”
Sales were revised between November 2024 and December 2024, up 0.7% from an increase of 0.4% over that period, the Census Bureau reported.
Auto sales were the main resistance in January's sales numbers, down 2.8%, the biggest drop in seven months. Sports goods, musical instruments and other enthusiast equipment fell 4.6% that month.
“The weaknesses were extensively based across retailers,” EY economist Lydia Bousall wrote in an analysis. “A combination of future views, easing inflation at the end of 2024, resilient labor market trends and strong momentum should put the floor under growth in consumption. [the first quarter]. ”
Retail sales have risen at a solid pace, up nearly 3% from the seasonally adjusted $710 billion in August to $700 billion in December.
Several economists noted that the sales pullback was linked to policy uncertainty swirling around the election, and that companies may have raised their order schedules.
“Front running tariffs likely contributed to a large number of retail spending that has progressed since early 2025,” Saidel-Baker said.
Recent Commerce Department data shows that personal consumption fell between November and December, down slightly from an increase of 5.75% to a rise of 5.69%.
