Retail sales fall 0.9% in January amid holiday hangover, cold weather
Consumers reined in their spending more than expected in January after a strong holiday season and as frigid weather moved into many parts of the country.
Overall retail sales in January fell 0.9%, according to data released by the U.S. Census Bureau. It was the largest month-over-month decline in sales since January 2024, and also more than the 0.2% decline economists had expected, according to Bloomberg data. Sales were up 4.2% year-over-year.
Core retail sales — excluding automobile dealers, gasoline stations and restaurants — in January were also down 0.9% month over month, but rose 4% year-over-year.
“It’s reasonable to expect some slowdown from the vigorous 2024 holiday season, so January’s numbers are not a surprise and don’t contradict the consumer spending trends we experienced,” said Jack Kleinhenz, chief economist, National Retail Federation. “The slower spending reflects weaker payroll growth in January, and higher prices remain a challenge for most households.”
Kleinhenz added that cold weather in many parts of the country and wildfires in California in January were likely headwinds that disrupted demand and consumer patterns.
“Nonetheless, these results point to a stable economy and provide a solid start to 2025,” he said.
The declines in January were led by sporting goods, music and book stores, where sales fell 4.6%. Online sales reported a 1.9% decline, and motor vehicles and parts spending dropped 2.8%. Gas stations along with food and drinking establishments both reported 0.9% increases.
In comments, David Silverman, senior director of Fitch Ratings, said Fitch expects 2025 retail sales growth to be modest but still positive given a still-healthy consumer, “with volatility in discretionary categories due to the interplay between goods and services.”
"Tariffs and other policy initiatives remain outstanding variables that could impact inflation and spending habits as the year progresses,” he said, “Operating flexibility and the ability to respond to and invest in competitive differentiators will be key for retailers to effectively manage through the year."
The January results come after core retail sales grew 4.% year over year during the 2024 holiday season and 3.6% for the full year.
