Marketwatchers have denounced reports that are weaker than expected regarding winter weather and wildfires.
US consumers have lidded spending to kick off 2025, indicating a weak economic growth outlook.
Consensus predictions suggested a 0.1% drop.
Last month’s decline was the most sharp decline since March 2023, with market watchers thinking that winter weather and Southern California wildfires sparkling consumer spending.
Sales at sports goods stores, hobby stores, music stores and bookstores resulted in a 4.6% decline. This was followed by auto and parts dealers (negative 2.8%), online outlets (negative 1.9%), and furniture stores (negative 1.7%). Conversely, sales at gasoline bureaus and food and drinking facilities increased by 0.9%.
Additionally, Control Group’s retail sales exclude receipts from building materials retailers, car dealers, gas stations, mobile home dealers, office supplies stores and cigarette stores, making 0.8% fel each month. This did not fall short of the consensus estimate of a 0.3% increase.
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However, there are concerns that January’s retail sales report could indicate a slower economy (a consumer spending account of about two-thirds of national economic activity), but experts should not have a cause for panic I say that isn’t.
“Monthly economic indicators often get crazy during natural disasters and bad winter weather,” Bill Adams, chief economist at Comerica Bank, told the Epoch Times in a memo sent by email. “Like Soft January’s employment report, the weak monthly retail sales report speaks less of a lot of economic trends than the monthly report.
Adams believes retail sales will recover in the coming months as winters ease and Californians rebuild.
Bankrate senior industry analyst Ted Rothman said the numbers in January 2025 were “pretty impressive” compared to a year ago.
“These numbers are particularly impressive in that context, as they were unusually cold and snowy in most of the countries, including parts of the South, where there are rare snowfalls last month,” Rothman said in a statement in the Epoch Times. Ta.
Retail sales grew 4.2% year-on-year, marking three consecutive months of annual growth of at least 4%.
Following the report, US stocks have been largely unchanged. Lower than expected retail sales could have given investors a faint glow of hope that the Federal Reserve could cut interest rates faster than expected amid slowing growth.
Recently, the futures market has pushed back expectations for rate cuts until September. However, according to the CME FedWatch tool, traders have increased the odds of a reduction in the next quarter to the benchmark federal funding rates through June or July.
The Treasury yields were completely red, falling below 4.47% in the benchmark decade.
Focus inflation
Inflation remains a problem for both consumers and the Federal Reserve.
This week, the consumer price index (CPI) inflation rate rose to 3% for the first time since June 2024. The Producer Price Index (PPI) is a measure of the prices paid by businesses for goods and services, and is higher than expected, with the potential to signal future inflation trends.
Federal Reserve Chairman Jerome Powell testifies before a House Committee on Washington’s Monetary Policy on February 12, 2025. Madalina Vasiliu/The Epoch Times
“The PPI report doesn’t tell the Fed much new,” Adams said. “They are pending for the near future, and if many momentum prices like homes and housing rents continue to cool down and offset the upward pressure on economic inflation from post-election changes, then in 2025. It is not guaranteed to make a single rate reduction, but perhaps not guaranteed. Policy.
President Donald Trump’s tariffs won’t appear in economic data anytime soon, but industry experts say the new administration’s trade agenda can bolster consumer prices.
David French, vice president of government relations for the National Retail Federation, praised Trump’s efforts to tear down trade barriers and address imbalances. At the same time, the French pointed out that the president’s mutual tariffs will disrupt supply chains and affect household finances.
Speaking to Congress for two days, Chairman Jerome Powell said monetary policymakers were not in a hurry to lower interest rates, and repeated his remarks to reporters at a press conference after last month’s meeting.
He said that policy restraints too quickly or too much could rekindle the flames of inflation, while mitigating policies too slowly and slowly threaten economic growth and labor markets.
The next two-day meeting of the Federal Open Market Committee is scheduled for March 18th to 19th.
