US retail sales rebounded sharply in January amid a surge in purchases of cars and other goods, but higher prices could blunt the impact on economic growth this quarter.
Retail sales surged 3.8% last month, the Commerce Department said today. Data for December was also revised down to show sales declining 2.5% instead of 1.9% as previously reported.
Economists polled by Reuters had forecast retail sales rising 2.0% with estimates ranging from as low as 0.7% to as high as 4.4%.
Motor vehicle sales typically drop in January after the holiday promotional season.
The decline last month was probably not as large as in prior years or did not happen because of a lack of supply, caused by a global shortage of semiconductors.
That likely resulted in the seasonal factors, the model used by the government to iron out seasonal fluctuations in data, being more generous than in previous years. Economists expect this boost to fade in March.
Retail sales last month were also lifted by higher prices because of shortages amid strained supply chains. Retail sales are mostly made up of goods and are not adjusted for inflation.
US restaurants and bars are the only services category in the retail sales report.
Excluding cars, fuel, building materials and food services, retail sales soared 4.8% January.
Data for December was revised lower to show these so-called core retail sales falling 4% instead of 3.1% as previously reported.
Core retail sales correspond most closely with the consumer spending component of gross domestic product.
With higher prices accounting for part of the increase in sales, inflation adjusted core retail sales were probably weaker, which could keep consumer spending on a slower growth path at the start of the first quarter.
The so-called real core retail sales are what matter in the measurement of consumer spending growth. Real consumer spending declined 1% in December.
US economic growth estimates for the first quarter are mostly below a 2% annualised rate.
The US economy grew at a 6.9% pace in the fourth quarter. Growth in 2021 was the strongest since 1984.