Holiday Spending Was Worse Than Originally Thought

Retail sales may have picked up in January, but the gloomy holiday spending picture was even worse than initially thought. Official figures showed Monday that retail sales, excluding volatile items like fuel, motor vehicles and construction materials, rose 1.1 percent in January, helped by a 0.8 percent increase in general merchandise stores. However, the good news stopped there as on the measure excluding volatile goods, December sales were downwardly revised to reflect a drop of 2.3 percent. The Commerce Department had previously estimated a 1.7 percent monthly fall. When the original figures were released a month ago, many economists suspected that the partial government shutdown may have meant the data was not collected properly and predicted that the figures would be upwardly revised. Even Larry Kudlow, director of the White House’s National Economic Council, said at the time that he “wouldn’t be surprised if January was revised up because of that.” As a result of the gloomy December numbers, retail sales excluding volatile items expanded by just 0.5 percent on an annualized basis in the fourth quarter, according to Andrew Hunter, senior U.S. economist at consultancy Capital Economics. This is the weakest reading in more than five years. He believes that despite the small January pick-up,

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