Retail sales rebounded sharply in January, the government reported yesterday, showing that consumers still are not retrenching despite wide-spread forecasts that the economy is heading into a mild recession.
Commerce Department figures showed that overall consumer buying rose a hefty 2.3 percent during the month -- a significant bounceback following a revised 0.5 percent increase recorded in December.
The increase came as a surprise to economists, who had expected to see retail sales began to sag following a relatively robust performance at the end of last year. Consumers already are heavily in debt.
However, William A. Cox, the Commerce Department's deputy chief economist, said the statistics did not change the administration's current forecast that the economy will undergo a mild recession early this year.
Cox said after yesterday's report was published: "I'm reluctant to assume that retail sales will continue to show any impressive strength over the long stretch. The consumer already is straining."
One major reason for the strength of the January rise was an unexpected last-minute surge in auto sales stemming from the new customer rebate programs launched by several of the Big Three automakers.
Cox also pointed to warmer-than-expected temperatures throughout most of the nation in January in contrast to unusually cold weather the previous January. He said the change may have exaggerated seasonal adjustment.
However, the figures showed increases posted in virtually every key sector of the economy. The only major decline came in sales of food and grocery items, which was not considered significant.
The 0.5 percent rise recorded for December was revised from a 1.1 percent jump reported in preliminary figures. Retailers had hailed the earlier estimates as evidence of a robust Christmas buying season.
The 2.3 percent increase for January brought overall retail sales levels to a seasonally adjusted $78.55 billion -- up $1.74 billion from December's revised level of $76.81 billion.
The department said sales of durable goods rose 3.6 percent in January to a seasonally adjusted $26.6 billion after rising 1.6 percent in December. Sales of non-durables climbed 1.6 percent, following an 0.1 percent rise in December.