WASHINGTON /February 14, 2018 (AP)(STL.News) — Americans cut back on purchases of cars, furniture and a variety of other products in January, pushing retail sales down by 0.3 percent, the biggest decline in 11 months.
The January decline, following no change in December, was the largest setback since a 0.5 percent fall in February of last year, the Commerce Department reported Wednesday.
The surprise slowdown comes after a three-month stretch of sizzling consumer activity, from September through November, which had fueled the most robust holiday sales in a decade.
The January weakness was larger than had been expected and could trim overall growth forecasts for the current quarter. Many analysts had believed that the economy might expand at a solid 3 percent pace in the current quarter, largely because they foresaw strong and sustained spending by Americans.
Auto sales fell 1.3 percent in January, the biggest monthly drop since August, and came on the heels of a smaller 0.1 percent setback in December.
But the weakness was not confined to the auto sector. Excluding autos, retail sales would have been flat in January and a number of key sectors from furniture to building supplies suffered declines.
Department store sales rose a solid 0.8 percent while a broader category that includes big box retail stores such as Walmart, rose a smaller 0.2 percent.
The booming internet shopping sector was flat in January, but is still 10.2 percent higher than a year ago.
Sales at gasoline service stations rose 1.6 percent, but that’s partly due to rising pump prices.
The overall economy, as measured by the gross domestic product, grew at a solid 2.6 percent annual rate in the final three months of last year. That followed two quarters in which growth had topped 3 percent.
That was a significant improvement from modest annual growth rates of around 2 percent the U.S. experienced during the economic recovery, now in its ninth year.
President Donald Trump insists that his economic program, which includes a $1.5 trillion tax cut, deregulation and increased infrastructure spending, will boost economic growth to 3 percent or better. The administration on Monday unveiled a $4.4 trillion budget for next year which shows that the tax cuts and higher government spending will result in $7 trillion in deficits over the next decade.
That was double the estimate for deficits that Trump made in his first budget last year.