U.S. retail sales in January jumped by 3% in January from December, the Commerce Department reported today, February 15. Economists surveyed by Bloomberg had expected a 2% increase. Retail sales had dropped in December and November.
Together with the strong job gains in January, this data point reduces the likelihood of a recession in 2023 and increases the odds that the Federal Reserve will continue to raise interest rates after its May 2 meeting.
For example, economists at Goldman Sachs reduced the likelihood of a recession this year from 35% to 25%. And Deutsche Bank has said it expected the Fed to add two additional hikes beyond those expected in March and May to a range of 5.5% to 5.75%.
Driving the gain in retail sales was a jump in auto sales, along with healthy spending at restaurants, electronics stores, and furniture outlets.