The consumer spending in the United States barely increased in the month of January as households slashed back on buying a range of goods, indicating that the country’s economy began the first quarter on a softer note.
The US Commerce Department on Thursday said that the retail sales exclusive of gasoline, automobiles, building materials and food services rose 0.1 percent in January after a 0.3 percent decline in December last year.
The so-called core sales of retails correspond most nearly to the consumer spending component of gross domestic product (GDP).
Millan Mulraine, deputy chief economist at New York-based TD Securities, said, “Overall, the tone of this report was discouraging as it underlines a weak start to the spending activity in 2015 in spite of the remarkable boost to disposable income from lower gasoline prices.”
The analysts had made forecasts of core retail sales to rise 0.4 percent in January. The soft reading could witness the trimming of forecasts by the economists for the first-quarter GDP growth.
The country’s economy grew at an annual pace of 2.6 percent in the fourth quarter. The trade data as well as inventory for the month of December indicate growth could be revised to as minimal as a 1.7 percent rate.
The financial markets in the United States were slightly moved by the data with main attention mainly focused on details of an agreement of ceasefire struck between Ukraine and Russia as well as a surprise cut in the interest rate and the bond purchasing program by the central bank of Sweden.
Despite a 39.5 percent drop in the prices of gasoline since June 2014, the consumer spending has remained soft in the past two months.
According to the economists, the households are using the additional income to clear the debt as well as boost savings.