Consumers Haven't Given Up Just Yet

by: Mark J. Perry

Feb. 13 (Bloomberg):

Retail sales in the U.S. unexpectedly rose in January as Americans spent more on cars, clothes and gasoline, a sign that the biggest part of the economy is holding up even as the housing slump deepens.

The Commerce Department said total sales rose 0.3% in January, compared to a 0.4% decline in December. From January 2007 to January 2008, retail sales increased by 3.9%.

Economists surveyed by expected a 0.3% drop in retail sales for the month.

The chart above shows annual retail sales growth rates, from the same month in the previous year, and averaged over six months to smooth the data. Notice that the trend over the last 9 months is upward, and it looks nothing like the downward trend in 2001-2002 during and following the last recession (shaded in graph).