The Commerce Department reported Thursday that retail sales unexpectedly fell 0.4% in January. Economists had expected sales to be unchanged from December. The agency also revised December retails sales downward. An initially report 0.2% increase was revised to just a -0.1%. Retail sales constitute a huge percentage of overall economic activity. The disappointing sales number are consistent with other data signaling a slowdown in the economy.
It was also reported Thursday that initial jobless claims, which had been expected to fall, unexpectedly jumped to 339,000. The 4-work moving average of those who were newly laid off or out of a job also edged upward.
Earlier this month, the Commerce Department reported that GDP growth in the 4th Quarter fell to 3.2% from growth of over 4% in the previous quarter. This week, banks slashed their estimates for GDP growth in the 1st Quarter of this year.
Whatever strength there was in the economy seems to be dissipating quickly. The economy has been in “recovery” for almost 5 years. This recovery, however, has mostly been treading water. The drop in retail sales could signal the economy no longer has the strength to stay afloat.