US retail sales rise - MyFoxAustin.com | KTBC Fox 7 | News, Weather, Sports

US retail sales rise

Posted: Updated:

WASHINGTON (AP) -- Americans barely spent more last month at retail businesses and restaurants after higher taxes cut their paychecks. The small increase suggests consumer spending may be weak in the January-March quarter, which could hold back economic growth.

Retail sales ticked up 0.1 percent in January from December, the Commerce Department said Wednesday. That follows a 0.5 percent increase in December and is the smallest in three months.

Sales fell at auto dealerships, clothing stores and furniture stores. They rose at home-improvement stores, gas stations and online retailers.

So-called core retail sales, which exclude autos, building materials, and gas stations, ticked up 0.2 percent. Economists pay close attention to core sales because they strip out the most volatile categories.

The retail sales report is the government's first look at consumer spending, which drives 70 percent of economic activity.

Growth is likely to stay weak in part because nearly all working Americans are taking home less pay this year. Congress and the White House allowed a temporary 2 percentage point cut in Social Security taxes to expire last month. That means a person earning $50,000 a year will have about $1,000 less to spend in 2013. A household with two high-paid workers will have up to $4,500 less.

Top-earning households are also paying higher income taxes this year. While the Obama administration and Congress agreed to prevent income taxes from rising on most Americans, their deal allowed income taxes to rise on individuals earning $400,000 a year and couples earning $450,000 a year.

The Social Security tax increase was a key reason the Conference Board's index of consumer confidence plummeted last month to its lowest level in 14 months. That survey was taken early in the month, when most Americans were discovering their smaller paychecks.

But a separate survey taken later in the month by the University of Michigan suggested consumers weren't quite as dismayed, possibly after absorbing the impact of the tax increase.

Americans may be feeling better about the economy because of improvement in the job market. Employers added an average of 200,000 jobs a month in the final three months of last year, the Labor Department said earlier this month. That was up from just 150,000 in the preceding three months.

And some retail store chains reported healthy sales gains last month, suggesting that at least some consumers kept shopping even after the tax cut kicked in. Some of the gains likely reflected healthy holiday discounts.

Overall, consumer spending grew at a faster pace in the final three months of last year than in the preceding quarter. Still, steep cuts in defense spending and slower company restocking weakened the economy in the fourth quarter.

  • Your MoneyMore>>

  • OKCupid, Facebook not alone in studying consumers

    OKCupid, Facebook not alone in studying consumers

    Tuesday, July 29 2014 4:51 PM EDT2014-07-29 20:51:44 GMT
    Think you're in control? Think again. This week, OKCupid became the latest company to admit that it has manipulated customer data to see how users of its dating service would react to one another. The New York-based Internet company's revelation follows news earlier this month that Facebook let researchers change news feeds to see how it would affect users' moods.
    Think you're in control? Think again. This week, OKCupid became the latest company to admit that it has manipulated customer data to see how users of its dating service would react to one another. The New York-based Internet company's revelation follows news earlier this month that Facebook let researchers change news feeds to see how it would affect users' moods.
  • New York's microbrew industry growing

    New York's microbrew industry growing

    Monday, July 28 2014 8:39 PM EDT2014-07-29 00:39:52 GMT
    Local and small beer brewing companies have something to toast. The Brewers Association says microbrew sales grew in the first half of this year; up 18 percent over the same period last year. This comes at a time when overall domestic beer consumption is flat.Ethan Long, one of the owners of the Rockaway Brewing Company in Long Island City, started brewing beer two years ago.
    Local and small beer brewing companies have something to toast. The Brewers Association says microbrew sales grew in the first half of this year; up 18 percent over the same period last year. This comes at a time when overall domestic beer consumption is flat.Ethan Long, one of the owners of the Rockaway Brewing Company in Long Island City, started brewing beer two years ago.
  • Maryland casino to interview workers from closing Atlantic City casinos

    Md. casino eyes workers from closing Atlantic City casinos

    Friday, July 25 2014 4:32 PM EDT2014-07-25 20:32:23 GMT
    AP photoAP photo
    A Maryland casino is looking to hire some of the soon-to-be-jobless Atlantic City casino workers. Maryland Live! is holding job fairs next week at the Sheraton hotel across from the Atlantic City Convention Center. The Hanover, Maryland casino held a similar recruitment effort in January when The Atlantic Club shut down.
    A Maryland casino is looking to hire some of the soon-to-be-jobless Atlantic City casino workers. Maryland Live! is holding job fairs next week at the Sheraton hotel across from the Atlantic City Convention Center. The Hanover, Maryland casino held a similar recruitment effort in January when The Atlantic Club shut down.
Powered by WorldNow

KTBC FOX 7
119 East 10th Street
Austin, TX 78701

Phone: (512) 476-7777
Fax: (512) 495-7001

Didn't find what you were looking for?
All content © Copyright 2000 - 2014 Fox Television Stations, Inc. and Worldnow. All Rights Reserved.
Privacy Policy | Terms of Service | Ad Choices