Americans backed off from their holiday spending pace in January, but retail sales rose for a third month in a row compared with a year earlier, largely because of higher gas prices, according to figures released Wednesday.
Analysts expect the modest spending pace to improve in coming months, though it will be far from robust as high unemployment and tight credit show little sign of disappearing.
Including goods from food to clothing to gasoline — but excluding cars — U.S. retail sales rose 3.6 percent from January 2009, according to MasterCard Advisor’s SpendingPulse, which estimates spending in all forms including cash.
That increase followed a 4.8 percent gain in December and a 2.1 percent gain in November, according to SpendingPulse.
Excluding both gas and auto sales, retail sales rose 0.3 percent in January, 2.1 percent in December and 0.2 percent in November compared with a year earlier. The year-over-year figures are not seasonally adjusted.
“Consumers are not going back to their caves, but they are not spending aggressively, either,” said Kamalesh Rao, director of economic research for MasterCard Advisors’ SpendingPulse.
With consumer spending — including major items like health care — accounting for 70 percent of U.S. economic activity, according to the government, economists watch it closely for clues on what lies ahead.
There have been some positive signs.
The Commerce Department said Wednesday that U.S. trade deficit soared to a larger-than-expected $40.18 billion in December, the biggest imbalance in 12 months. The wider deficit reflected a rebounding economy that is pushing up demand for oil and other imports.
Friday’s report from the Federal Reserve on consumer borrowing showed that Americans borrowed less for an 11th consecutive month in December, paying off credit cards while increasing borrowing for cars and other big-ticket items such as education.
That mixed picture fuels some hope that Americans may start spending more, a key element for economic recovery. But the record 11-month decline in borrowing shows consumers are still cautious about or unable to get credit.
“We are starting to see consumers buying a wider variety of products. This is positive,” said Richard D. Hastings, a consumer strategist with Global Hunter Securities, citing such products as appliances — small and big — clothing and footwear. Those had been hit hard in the recession.
He noted that shoppers’ move to cut their debt is bolstering their net worth and will eventually mean a pickup in spending, which he believes will happen by summer.
SpendingPulse’s month-to-month figures — which are seasonally adjusted and include gasoline but exclude autos — show January’s sales rising 2.8 percent from December’s, which fell 1.9 percent from November’s. November’s sales rose 1.1 percent from October.
SpendingPulse issued its data ahead of the release of government figures, which has been postponed tentatively to Friday, from Thursday because of the snowstorm that shut down federal offices in Washington. Analysts will also be studying earnings reports due later in the month from major retailers such as Wal-Mart Stores Inc. and J.C. Penney Co. that could offer more insight into how consumers will behave in coming months.
Economists surveyed by Thomson Reuters predict the U.S. Department of Commerce’s sales index due Thursday, which excludes autos but includes gasoline, will be up just 0.5 percent in January from December.
Shoppers generally pulled back on discretionary items like electronics, Rao said, but did buy clothes, which was borne out in January figures released last week by apparel chains.
SpendingPulse estimates that women’s clothing sales rose 2.7 percent and men’s 2.5 percent in January 2010 from January 2009. In contrast, electronics sales rose only 0.4 percent and online sales growth slowed to 15.1 percent from 17.7 percent in December 2009.
According to a tally from the International Council of Shopping Centers, selected retailers’ sales in stores open at least a year rose 3.0 percent in January from a year earlier. The figure was well above ICSC’s forecast for a 1 percent gain.
ICSC’s data includes primarily clothing sellers; it excludes autos, gasoline and building materials. After Wal-Mart Stores Inc., the world’s largest retailer, stopped participating last year, the monthly figures released by individual stores became a better gauge of discretionary spending than the economy overall.