In the United States, which is still feeling the effects of Covid, there is eager anticipation for a return to pre-Covid economic levels. Fortunately, we can observe that the economy is steadily improving as Fed continues its interest rate hike. As consumer expenses continued even with increased inflation worries, retail sales in January surged more than expected.
There Is An Increase In Almost All Categories
According to the Commerce Department, retail sales for the month saw a 3% rise higher than expected. If we exclude automobile sales from this data, then it is found that there was still an increase of 2.3%, exceeding initial predictions of 0.9%. This influx in spending marks a promising step forward for economic growth and prosperity!
Food services and drinking places soared 7.2% to top every major category, while motor vehicle and parts dealers saw a jump of 5.9%. Furniture and home furnishing stores experienced an uptick of 4.4%, even with gas prices rising 2.4%. Service stations remained flat; online retailers rose by 1.3%; electronics and appliance stores increased by 3.5 % after December’s downward spiral in sales (1.1%). Every single sector showed progress – no declines this time around!
It Looks Like The Fed Will Go For An Interest Rate Increased Again
On Wednesday, the Fed issued news regarding industrial production in January. Counter to expectations of a 0.4% gain; figures remained stationary. Manufacturing output improved by 1%, while mining saw an even greater boost at 2%. Unfortunately, utilities dropped 9.9%, likely due to unusually warm temperatures this time of year. Capacity utilization became slightly impaired, too–decreasing 0.1 percentage points from 79% to 78.3%.
Comerica Bank’s chief economist, Bill Adams, declared that the monthly reports on industrial production, retail sales, and jobs surpassed expectations – which is evidence of an economic upsurge in early 2023 after a slight dip towards the end of 2022. The Fed will also perceive the recent activity as motivation to raise interest rates during this year’s first half.
The Labor Department announced on Tuesday that the consumer price index had surged by 0.5% in January, signifying a significant rise in inflationary pressures. However, surprisingly enough, it appears that even with this increase in prices, consumers have continued to maintain their spending levels.
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