Retail Sales

Broad-Based Spending Gains Backstop
Retail Sector's Favorable Outlook

All brick-and-mortar categories record monthly increases. Store-based retail sales, which exclude spending online and at restaurants and bars, climbed 1.7 percent in January, marking the largest monthly rise in nearly two years. Reversing a recent down trend, gains were widespread across store types, highlighted by notable improvements in furniture, appliance and clothing-related purchasing. This broad-based increase signals that consumers, while pressured by inflation, still have solid cash reserves and borrowing capacity following the holidays, a boon for near-term retail property performance. Further brightening the sector's outlook, Social Security benefits rose by 8.7 percent at the onset of this year, a cost-of-living adjustment that will aid the spending power of approximately 70 million beneficiaries.  

Gains also prevalent across dining places. Even while consumers spent more at stores last month, they have also yet to curtail the frequency in which they eat out and socialize, translating to a more than 7 percent elevation in restaurant and bar sales this January. Ranking as the category's largest margin of increase in 22 months, the improvement potentially reflects households’ increased reliance on fast-food chains,  as the low-cost dining option is appealing amid a climbing price environment. Contrasting this segment, grocery spending shifted nominally. Still, a 25th consecutive month of increase was noted in the category, with February spending likely to be aided by Super Bowl-related purchases.