Revisions and Inflation Generate January Retail Sales Gain. Despite the Pollyannaish hype being put out to the markets, the January retail sales report confirmed an ongoing recession. The Census Bureau reported seasonally-adjusted January retail sales up by 0.33% (down 0.01% net of revisions) +/- 0.6% (95% confidence interval), following a 0.45% (previously a 0.37%) decline in December. On a year-to-year basis, January retail sales rose 3.85%, against 3.66% (previously 4.08%) in December.

With December annual CPI at 4.1% and with January’s CPI (due Wednesday, February 20th) expected at roughly 0.3% month-to-month, 4.2% year-to-year, real (inflation-adjusted) annual retail sales will have held in negative territory for two consecutive months, an event rarely seen outside of recessions. The reported January monthly gain likely also will evaporate after inflation adjustment.

Monthly Core Retail Sales up 0.11%. Consistent with the Federal Reserve’s predilection for ignoring food and energy prices, "core" retail sales — retail sales net of grocery store and gasoline station revenues — gained 0.11% (a decline of 0.45% net of revisions) for the month, after falling by a revised 0.64% (previously a decline of 0.36%) in December. 

Barring any significant surprises or unusual developments, the next Flash Update is planned for over the coming weekend. Further details on retail sales will follow in the February newsletter.