Retail sales increased 7.4% in January, as consumers shrugged off world events and inflationary pressures, opening their wallets and enjoying the holidays through gift giving and dining out. Food services/dining increased 25.2% in January vs. 2022; other retail segments showing gains included clothing/accessories (+6.3%) and sporting goods (+6.9%) - consumer electronics continue to slide.
The Consumer Sentiment Index moved just slightly and was 1.5 index points above January; recent economic trends, both positive and negative, have led to mixed attitudes among consumers with little net change in February. Moving into 2023, retailers are taking another look at labor costs and starting to analyze opportunities to do more with less, combating newly increased minimum wage rates to eliminate non-value-added activities and increase store efficiencies to improve the customer experience. Key economic indicators point to a potential recession in the U.S., but consumers have been resilient amidst the turmoil and have shown a willingness to take on additional debt to fuel their purchases. Retailers face significant challenges in the near term in managing excess inventory and making strategic decisions around purchase quantities for Spring 2024 goods.
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