January Retail Sales +0.1%

The Commerce Department reported that retail sales rose by just 0.1% last month. That’s not very strong, but part of the problem was that higher taxes took a bite out of consumers. Still, the report was inline with what economists were expecting.

Economists also like to look at “core sales,” which is retail sales excluding cars, gas and building materials. In others words, they want to focus on basic consumer spending habits. For January, core sales also rose by 0.1%.

Even though the Q4 GDP report was rather poor, economists were impressed by the strength of consumer spending. That’s why people are interested to see if that trend is holding up into Q1. This is especially important for our retail stocks like Bed, Bath & Beyond ($BBBY) and Ross Stores ($ROST). If you recall, Ross recently said they had pretty good sales for January.

I should add that the Q4 GDP report will probably be revised higher thanks to the recent trade report. In fact, it will most likely go from being a negative number to a positive one.

The outlook in Europe got a boost this morning when the industrial production number came in at 0.7% growth which was better than the 0.2% that was expected.

In the U.S. market, the Volatility Index ($VIX) is close to hitting a six-year low today. If this keeps up, we might have to change the name from the VIX to the NIX. The VIX closed yesterday at 12.64 while the low is 12.29 from January 18th. The last time we were that low was February 27, 2007 which was the start of the financial crisis.

Posted by on February 13th, 2013 at 10:05 am


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