Consumer Spending Will Boost Growth in 2014 — But Not Just Yet
Even though analysts have expressed confidence that consumer spending will likely boost growth in 2014, indicators suggest January’s growth in the sector was far from remarkable. Retail sales experienced a normal post-holiday drop last month, according to Gallup’s reading of self-reported consumer spending data, although spending levels were relatively high when compared to first four Januarys following the 2008 financial crisis.
That improvement could be, as Gallup’s Lydia Saad suggested, a product of the recent acceleration in economic growth. Indeed, economic growth is picking up: In the fourth quarter, a 3.3 percent increase in real personal consumption expenditure helped annual gross domestic product expand at a 3.2 percent rate.
Beyond the typical post-holiday decline, frigid temperatures also impacted the retail industry significantly last month, as weekly snapshots of sales compiled by industry trade groups — the International Council of Shopping Centers and Johnson Redbook — have indicated. So far, it appears February has been similarly affected.
Official data for January will not be released by the Department of Commerce until Thursday, but economists expect the results to be weak, with estimates set for a 0.1 percent decline in retail sales. Retail sales — an important gauge of consumer spending — ended the year with a 0.2 percent gain that may seem small but beat the expectations of analysts who had predicted sales would be flat with November.