Severe cold cripples January retail sales

Consumers levelled off post-holiday shopping and spending in the beginning of the year due in part to severe winter weather in much of the country. According to the National Retail Federation (NRF), January retail sales – excluding automobiles, gas stations and restaurants – were flat seasonally adjusted month-to-month yet increased 3% unadjusted year-over-year.

“Following a solid holiday sales season, it seems that many consumers decided to take a break from the stores and shopping malls this January in an attempt to avoid winter weather,” believes NRF president and CEO Matthew Shay. “While the dip in retail sales was somewhat anticipated, it is concerning that both jobless claims came in above projections and that consumer spending were flat in January – it’s not the way to kick off a new year,” he adds.

“Harsh winter weather is masking the performance of the broader economy. Extreme temperatures and severe ice and snow are making it increasingly difficult to assess if the retail sales slowdown is temporary or a telling sign of a longer lasting weakness in the consumer-fuelled economy. No one can jump to any solid conclusion until we shovel out of the snow,” says NRF chief economist Jack Kleinhenz. Earlier this month, NRF released its annual economic forecast projecting a 4.1% increase in retail sales in 2014.