Consumer Spending Rise Tempers Recession Fears

There was plenty of doom and gloom whenever retail sales numbers came out during the holiday sales season, as no single month ever really lived up to retailers’ expectations. Now that January has come and gone, though, it seems as if the months of promising sales just got off to a late start.

The U.S. Department of Commerce announced that retail sales in January edged upwards in January in multiple categories. Retail stores and restaurants saw a 0.2 percent spike in sales compared to December, which the Commerce Department also revised from a previous monthly sales number indicating a drop in sales to the new figure of a similar 0.2 percent rise over Nov. 2015. Paul Ashworth, chief economist at Toronto-based Capital Economics, told Reuters that the numbers indicate a bit of a surprise for U.S. retailers and shoppers alike.

“The markets may have decided that the U.S. is headed for recession, but, obviously, no one told U.S. consumers,” Ashworth said.

The sales numbers come amid a fair amount of turbulence in the retail industry. Plummeting sales prices have sent the stock market into a period of prolonged immediate volatility, and near-weekly fluctuations to established blue chip stocks, like Walmart and Apple, have eroded investor confidence in a short amount of time.

However, Vasant Prabhu, CFO at Visa, told an audience at the recent Goldman Sachs Technology and Internet Conference that lower gas prices could continue to spur more consumer activity for a long time to come.

“Consumers are now beginning to believe that these gas prices could stay low for longer, which would suggest that they may feel better about spending some of those savings,” Prabhu said, as quoted by The Wall Street Journal.

The news should come as a welcome sign that 2016 could hold more good surprises for retail than 2015 — but only if retailers believe that high sales are pegged to low gas prices.