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Retail Sales Tepid in January, Tax Rebates Expected to Give Boost

Retail sales data for January from the US Commerce Department (which include non-general merchandise such as autos, gasoline stations and restaurants) show an increase of 0.3% seasonally adjusted from December and 4.6% unadjusted year over year, reports the National Retail Federation (NRF).

NRF data (which excludes autos, gas stations, and restaurants) showed an increase of 0.1% seasonally adjusted from December and 2.0% unadjusted from last year.

Winter weather and clearance sales boosted clothing and clothing accessories figures, the NRF noted. But, overall, consumers last month were focused on buying necessities rather than discretionary items:

“The January numbers are indicative of the issues consumers are facing, including the housing slump, a sluggish employment sector and high energy prices,” said NRF Chief Economist Rosalind Wells. “We expect to see marginal improvements in the second half of the year once consumers begin to receive their rebate checks.”

In hopes of increasing consumer spending, Congress passed and President Bush signed a $152 billion measure that will provide tax rebate checks amounting to $105.7 billion.

A survey conducted by BIGresearch for the NRF found that consumers plan to spend 40.6% of their checks when they are distributed, providing an immediate $42.9 billion boost to the economy.

The study also found:

• $30.0 billion will be used to pay down debt.
• $19.8 billion will be saved.
• $4.6 billion will be used to pay down medical bills.
• $4.4 billion will be invested.

Some demographic findings of the study:

• Women will spend a larger percentage than men will (42.2% vs. 38.7%).
• Both genders will set aside 18.7% of the rebate as savings.
• Young adults 18-24 will spend more of their checks (46.2%) than any other age group.

About the poll: BIGresearch’s syndicated Consumer Intentions and Actions survey for the NRF approached 7,977 consumers February 5-12, 2008 with the question, “The President and Congress are discussing options for sending families rebate checks ranging from $600 - $1,200. If you get one, what will you do with the money?”