Retail Sales Drop in January as Online Sales Flatten

By Mark Lieberman

Managing Director and Senior Economist


  • January retail sales – measured by prices – FELL $1.3 billion or 0.3 percent from December;
  • Virtually every category of sales, except electronics, clothing and sporting goods stores saw a decrease in January; sales at Gasoline stations were up 1.6 percent in January as the average price of a gallon of gasoline rose from $2.594 in December to $2.671 in January; were off 0.3 percent attributable to unseasonably warm temperatures;
  • Building materials and supply stores saw the largest drop in sales, a 2.4 percent decline from December


  • Year-year total sales ROSE 3.5 percent in January, after a 5.2. percent December-December increase;
  • Online sales in January were virtually flat to December and represented 1.8 percent of total January sales, down from 11.2 percent in December;
  • With the Bureau of Labor Statistics reporting a sharp 0.8 percent increase in prices in January; the drop-in retail sales reflects demand, not price changes;

Data source: Census Bureau

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The Census Bureau’s report on retail sales was a dose of reality for retailers and indeed may have been anticipated. Two major retailers announced severe cuts just ahead of the Census report: Walmart dropping store managers and J.C. Penney eliminating almost 700 warehouse jobs.

{The Census Bureau retail sales report states clearly that it is not adjusted for price changes which means if the same item which sold for $1 in one is sold for $2 the next month, the report would show a 100 percent increase.]

The retail report sets a base against which to measure the impact of the increase in take-home pay as a results of the tax code changes enacted by Congress and signed into law by the President. What remains to be seen is whether taxpayers will squirrel away those increases in anticipation of the loss of deductions also contained in the new tax law.

The drop in sales followed as well the report by the Bureau of Labor Statistics two weeks ago of a 7.7 percent gain in retail jobs in January. Retail employment was down 0.2 percent from January 2017 to last month and fell by about 2,400 in 2017. In 2016, retail employment grew by about 17,000.

The dip in retail sales could have an impact on first quarter GDP since retail sales are about55 percent of consumer spending which is about 2/3 of GDP.

Hear Mark Lieberman on the Morning Briefing on P.O.T.U.S. radio @sxmpotus, Sirius-XM 124, every Friday at 6:20 am Eastern Time. You can follow him on Twitter at @foxeconomics.  

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