Trump’s presidency started on a good note with consumers as retail sales increased more than expected for January.
A Commerce Department report on Wednesday showed retail sales in January were $472.1 billion, an increase of 0.04 percent over December. That went well above the 0.01 percent increased predicted by economists. In comparison to last year, January retail sales increased by 5.6 percent.
The department also revised the retail sales numbers for December. Originally reported at 0.06 percent, the new revised sales number for the month bumped up to 1 percent.
Consumers did not show any fear of a change in leadership in the White House. Gas stations showed the largest increase in sales by 2.3 percent followed by sports goods/hobby stores at 1.8 percent and electronics and appliance stores at 1.6 percent.
Excluding auto sales, which declined for the month by 1.4 percent, retail sales were up by 0.08 percent. A decline in auto sales in January is possibly due to auto retailers taking their January sale incentives and moving them to December in order to increase sales for the month. Even with auto sales declining, there still was an improvement from the previous year by 6.8 percent.
Online retailers and furniture stores showed no movement for the month.
Although the actual retail sales crushed predictions, some experts are not celebrating too early considering January’s numbers are seasonally adjusted.
“I would generally not get too caught up in the month to month numbers,” said Jim O’ Sullivan, chief U.S. economist at High Frequency Economics. “There are some big swings in January and December numbers. I don’t think you should make too much of that pattern. If you look at the year-over-year in January, they’re pretty solid numbers.”
With President Trump officially taking office on Jan. 20, multiple economic indicators have shown signs that the U.S. economy is strong. Along with better than expected retail sales numbers showing that consumers have confidence in the economy, the Dow Jones Industrial average surpassed 20,000 indicating that investors are also showing their trust in the economy and the Bureau of Labor Statistics’ U.S. Job Report indicated that 227,000 were created also surpassing expectations.
Possible presidential action aside, the Federal Reserve may have to consider increasing the interest rates. By increasing interest rates, the Fed will begin slowing down the economy to prevent possible inflation. Consumer spending makes up 70 percent of economic activity and is one of the indicators that the Fed keeps an eye on. The next meeting of the Federal Reserve will be in March.
For President Trump, the numbers don’t lie. This is a good start for his presidency.
“To-date in the cycle, Q1 has been the weakest quarter for growth by a good margin but today’s data offers some encouraging evidence that 2017 may buck the trend,” said Thomas Simons, an economist at Jeffries Group. “The bottom line on this data release is that consumer spending is quite healthy and Q1 looks like it is off to a very solid start.