Retailers see turnover increase despite rising prices

Official January numbers released this week show U.S. retail sales were up 3 percent. This is the largest increase since March 2021 and reverses a 1.1 percent decline since the end of 2022. Department stores also saw an impressive 17.5 percent increase. This is remarkable, since sales figures after the holidays are often disappointing.

The New York Times reports consumer spending ensured continued strength in the labor market. Wages have remained solid and people have cash. Simon Property Group – which runs malls nationwide – reported optimism about retailers’ performance. In a recent conversation with analysts, CEO David Simon said his company “feels really good about our retailers.” He also reportedly indicated that colleagues who asked about signs of a consumer demand slump said it “hasn’t really happened”.

The Fed raised interest rates in 2022, aiming to constrain the economy. Housing markets have cooled, but consumer spending seems to be declining as well. But recent retail sales may show that rate hikes by the Fed have not impacted consumer spending as much as some analysts feared.

Meanwhile, Fed officials have hinted interest rates could rise if inflation is not reduced.

Other economists are skeptical of these new retail numbers, the Time. They think they may be abnormal and are caused by unusually warm weather in January. Sales may fall again when temperatures return to normal in the coming months.