Retail sales fall 0.8% in January from December as shoppers pause after strong holiday season

Americans pulled back their spending in January after splurging during the holiday season

NEW YORK -- Americans pulled back their spending in January more than expected after the traditional holiday season splurge.

Retail sales fell 0.8% in January from the strong pace in December when they rose a revised 0.4%, according to the Commerce Department's report on Thursday. Excluding sales at auto dealerships and gas stations, sales were down 0.5%. The decline was bigger than the 0.10% drop that economists expected and marked the lowest monthly figure since March of last year.

Economists had expected Americans to pull back on spending late last year under the weight of credit card debt and diminished savings. Yet despite those challenges, along with higher borrowing costs and elevated prices, household spending continues to be fueled by a strong jobs market and rising wages.

There was another surprising burst of hiring to start off 2024 as employers added 353,000 jobs in January, more evidence that the highest interest rates in two decades, intended to slow the economy, have yet to take hold.

But shoppers appeared to be slowing down their spending in January.