Retail sales surprised to the upside in January with upward revisions to December. That was despite the storm, Jonas, that took out spending on a key weekend in a largely populated area on the East Coast. The storm also spurred people to spend more at grocery stores than at restaurants and pushed more spending online. A gain in vehicle spending was helped by the ongoing shift in demand toward larger and more expensive SUVs.
Discounters also regained some ground, which likely reflects the positive effect of lower prices at the gas pump. Department stores continue to lose ground. Millennials do not like department stores and tend to stay away from them when they do spend.
Bottom Line: Main Street continued to pull its weight in January, despite the continuing downdraft on Wall Street. Most investors won’t see their first quarter 401K statements until early April. The ongoing strength of the consumer is critical to containing fear on Wall Street and stemming the spread of that fear to C-suites. The Federal Reserve is also betting heavily on the resilience of the U.S. consumer and (at least today) that looks like a good bet.