Chill in Retail: Economic Growth Slows as U.S. Sales Experience Sharp Drop

In January, U.S. retail sales experienced their most significant decline in nearly two years, attributed to cold weather and past gains. The drop, revealing economic growth deceleration, is seen across various sectors, with rising prices and tariff confusion affecting consumer behavior and sentiment.

U.S. retail sales took a significant hit in January, plummeting by the most in nearly two years, according to data from the Commerce Department. The decline, attributed to severe weather and a natural slowdown following strong advances in the preceding months, suggests that the economic growth has sharply slowed.

The broad-based downturn in retail sales has economists speculating that rising prices and an uncertain economic outlook, particularly concerning tariffs, are causing consumers to become more cautious with their spending. This sentiment is reflected in early February's inflation expectation spike, reaching a 15-month high.

Retail sector performance varied, with auto sales, furniture, and clothing facing noticeable downturns, while food services marked a slight uptick. Despite these fluctuations, consumer spending remains essential for GDP growth, maintaining economic stability as it rebounded from inventory reductions in the previous quarter.

(With inputs from agencies.)