On Wednesday, the January retail sales report is due in the US. According to analysts at Wells Fargo, sales likely rebounded rising 2.1%, a number above the 1.6% increase of market consensus.
Key Quotes:
“Retail sales declined sharply to end 2021. During December, total sales fell 1.9%, a drop that was more severe than consensus expectations. The decline was broad-based across most store types. Excluding spending on autos and gas, sales fell 2.5%. While it is tempting to blame December’s drop on intensifying inflation and the Omicron surge, the weakness during the month was more a reflection of early holiday shopping and pulled-forward demand. That is not to say inflation is not a concern moving forward. Inflationary headwinds to consumer activity are likely to pick up throughout 2022, as evidenced by the recent deterioration in consumer sentiment.”
“Another factor that may affect spending this year is that, as the economy emerges from the latest Omicron wave, it doesn’t have the same fiscal support it had previously. In terms of COVID, consumers continue to become desensitized to rising case counts with each passing wave of the virus. In addition, households remain in solid financial shape today, which should support overall consumer spending in the months ahead.”
“We look for retail sales to bounce back and rise 2.1% in January.”