Retail Sales Rise in January to Near Pre-Crash Levels

Retail sales rose 0.5% in January, providing evidence that consumer confidence has nearly recovered from the October stock market crash, some economists said Thursday.

Retail establishments sold $128.1 billion worth of goods in January, up $600 million from December, the government said. It was the third consecutive increase and the highest monthly total since August, when sales hit $128.9 billion.

The Commerce Department also revised earlier estimates for December and November, showing better sales than previously thought. Sales were up a strong 1.2% in December and a modest 0.3% in November, compared to previous estimates of 0.7% and 0.1%, respectively.

The report “shows a solid pace of spending through Christmas and beyond,” said Allen Sinai, chief economist of Boston Co. “Consumer sentiment has rebounded now . . . and is just below pre-crash levels.”

Since consumer spending accounts for two-thirds of overall economic activity, analysts have been watching it closely for signs of an economic slowdown.

Sandra Shaber, an economist with the Futures Group, a Washington consulting firm, said, “consumer confidence has been coming up since October” and the past several months show “a modest rebound” from sharp sales drops of 0.9% in October and 1.7% in September.

“From anything we can tell, consumers are not ready to do any serious retrenchment,” she said. They “aren’t going to drag us into a recession this year, but they’re not going to keep us out of one, either.”

Some analysts, however, cautioned against reading the report too optimistically.

“The big increase in January . . . should be taken with a grain of salt. . . . Whatever strength we’ve seen has been mostly in automobile sales,” said Richard W. Rahn, chief economist of the U.S. Chamber of Commerce.

Car sales climbed 1.6% in January following an increase of 1.9% in December. Excluding autos, sales rose 0.2% last month following a gain of 0.9% in December.

Auto sales had slumped in the fall, when dealers discontinued end of the model year sales incentives.

For January, sales of durable goods, items expected to last three or more years, increased 1.3% following a 1.9% gain in December. Sales of non-durable goods were unchanged in January after a 0.7% gain in December.

The Commerce Department offered these details of sales in January:

- Furniture and home furnishings, up 2.6% following a dip of 0.5% in December.

- Hardware and building supply stores, up 2.9% after a month of no change.

- Department and other general merchandise, up 2.5% after a 1.4% rise a month earlier.

- Drug stores, up 1.7%, and gasoline stations, up 1.6%.

- Grocery and other food stores, down 0.8%; restaurants and bars, down 0.9%, and clothing stores, down 0.5%.

The figures are adjusted for seasonal variations, but not for inflation.