Lift in retail sales may be short-lived
Published 7:43 pm Wednesday, February 13, 2008
WASHINGTON — Retail sales posted a surprising rebound in January following a dismal December, although much of the strength reflected rising gasoline prices. Economists saw the increase as a temporary blip rather than a sustained recovery.
The Commerce Department reported Wednesday that retail sales rose by 0.3 percent last month after falling by 0.4 percent in December as retailers suffered through their worst Christmas shopping season in five years. The increase was led by higher demand for new cars and a big jump in sales at gas stations that reflected rising pump prices.
The better-than-expected gain did little to change the view of economists who are forecasting that the economy will fall into a recession in the first half of this year. But they said the slump should be shorter and milder given that Congress quickly passed and President Bush signed this week a $168 billion stimulus package designed to jump-start growth by showering consumers with rebate checks starting in May.
The January gain in retail sales came as a surprise after reports from the nation’s big retailers that January had been a disappointing month. Wal-Mart had said strapped consumers were using their holiday gift cards to purchase basic items such as diapers and laundry detergent rather than iPods and the latest DVDs.
Economists had forecast a 0.3 percent decline in January sales. They noted that without the big jump in gasoline, sales would have risen by 0.1 percent. They pointed to a number of areas connected to the troubled housing industry where sales took a tumble, including declines at furniture, hardware and appliance stores.
“Consumer spending is still decelerating quite dramatically,” said Nariman Behravesh, chief economist at Global Insight, a private forecasting firm, which is predicting that the economy will be in a recession in the first half of this year, contracting at annual rates of 0.4 percent in the current quarter and 0.5 percent in the second quarter.
