Houston's Rate Sheet

Shoppers buy a lot of things in January

Cash-out refinance are down, but consumers still have money to spend. Retail sales were up last month as consumers flocked to stores and bought things. The AP reports:

The Commerce Department said retail sales excluding autos were up 2.2 percent in January, the best showing in this category since late 1999. With autos included, retail sales rose by 2.3 percent, the best showing in 20 months. Overall retail sales had risen by a tiny 0.4 percent in December.

Analysts had been expecting a rebound, in part because the weather in January in the Northeast and Midwest was the mildest in more than a century. The warmer-than-usual weather meant that consumers, buoyed at not having to spend as much on home heating bills, trooped to the stores to redeem the gift cards they had received in December.

The 2.3 percent rise in total sales was the largest one-month gain since a similar increase in May 2004. The 2.2 percent increase in sales outside of autos was the biggest increase since a 2.5 percent surge in December 1999, a period when the U.S. economy was in the midst of the longest expansion in history.

The strength last month was led by a 2.9 percent jump in sales at auto dealers, the best showing since a 5.5 percent increase last November. Sales were also strong at department stores, furniture stores and clothing stores.

The report goes on to predict a strong 1st quarter for the economy. According to this AP reporter, some economists believe growth could surge to a 5 percent annual rate. There was little response to this report in the bond market. Treasury yields are slightly down from Friday's close.

posted by Vincent Biondillo @ 9:11 AM