A family eats lunch near a store advertising a Black Friday sale at the Pentagon City Mall in Arlington, Virginia, on November 22, 2023. (Photo by ANDREW CABALLERO-REYNOLDS / AFP) (Photo by ANDREW CABALLERO-REYNOLDS/AFP via Getty Images)
Andrew Caballero-reynolds | Afp | Getty Images
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What you need to know todayÂ
The bottom line
Americans tightened their spending at the start of this year after the usual holiday season splurge.
Consumer spending saw a large drop, declining 0.8% in January from a month earlier. The bigger-than-expected plunge came after a robust round of spending in December, which was downwardly revised to a 0.4% gain.Â
The weak retail sales data raises fresh doubts on the strength of U.S. consumer activity, which accounts for roughly two-thirds of economic growth.
Consumer spending has been holding up remarkably despite higher borrowing costs and persistent inflation. And the U.S. economy has proven to be far more resilient even as others, such as Japan and the U.K., showed weakness and slipped into technical recessions.
Still, there were other positive economic indicators that offer a glimmer of hope.
Jobless claims released Thursday continued to surprise to the downside despite layoffs from major companies in recent weeks. It reflects underlying strength in the labor market, another critical factor for economic growth.
There was also good news on the manufacturing front, as regional surveys in the Federal Reserve’s Philadelphia and New York districts both came in better than expected for February.
Given the mixed economic data, Wall Street’s focus will turn to Friday’s producer price index â which is usually not given as much attention. But now it will be, given the big hit to CPI on Tuesday.
â CNBC’s Jeff Cox contributed to this story.