A surprise 0.3 percent increase in January retail sales led by hefty spending on autos sent stocks higher Monday. Wall Street had expected a 0.2 percent drop. Despite some downward revisions to earlier months that could lower fourth-quarter growth and still-weak sales excluding autos, the report offered a bit of hope the United States may still have a chance to avoid recession.
Some analyst reaction:
Michael Woolfolk, Senior Currency Strategist, the Bank of New York, says, "The takeaway from this report is that the U.S. consumer may be in better shape than earlier thought and the Fed's extraordinary measures in January may indeed succeed in averting a recession. The implication for the USD is undeniably positive."
Ian Shepherdson, chief U.S. economist, High Frequency Economics, questions how strong the auto market really is given a 6.4 percent drop in sales by automakers, even if sales at dealers rose by 0.6 percent. Sales, he says, are still "soft and slowing but could have been worse."
Goldman Sachs notes that while the sales gain is nice, "they came off of a reduced base. When the revisions are factored into the mix, this report underscores the weakening trend in consumer spending."