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Consumer Spending Bounces Back in January In Spite of Numerous Headwinds

Neither snow nor Omicron nor inflation could stop U.S. consumers last month.

The U.S. Census Bureau reported today that retail and food service sales in January 2022 totaled $649.8 billion, marking a seasonally adjusted 3.8% increase from the previous month and a 13% leap from January 2021.

This spike came despite a number of headwinds, including another surge in COVID-19 cases, which caused some stores to cut back their hours. Meanwhile, rising inflation hit another another record high last month and a string of major snow storms disrupted transit throughout the country.

Specifically, January sales from retail rose 4.4% from the prior month and 11.4% year-over-year. Clothing and accessories stores pulled in $26.1 billion during January, up slightly from $25.9 billion in December. And department stores totaled $11.9 billion, compared with $10.9 billion the previous month.

Leaders from the National Retail Federation read this news as a positive indicator that 2022 will continue to bring upward momentum. “While the year ahead has challenges with inflationary pressures, labor shortages, COVID-19 impacts and uncertainty related to international tensions in Russia and China, today’s numbers show that despite these concerns, consumers are spending, and the economy remains in good shape,” NRF president and CEO Matthew Shay said in a statement.

He further predicted that retail sales growth will continue in the coming months, but warned of election-year political decisions that could compound the issues already plaguing the economy.

In its report today, the Census Bureau also revised its estimates for December 2021. According to its data, sales declined 2.5% from the prior month (the previous estimate was for -1.9%). Many experts attributed that dip to customers shopping earlier in the holiday season to avoid issues with shipping and deliveries.

And indeed, consumers overall delivered a banner holiday season for retailers. According to NRF’s calculations — which excludes automobile dealers, gasoline stations and restaurants — sales during the holidays increased a record 14.1% year-over-year and hit a record high of $886.7 billion.

That lines up with the early reports from companies like Genesco and Caleres, the respective parent companies of Journeys and Famous Footwear. Last month, both companies announced positive preliminary results for the most recent earnings quarter.

“We are pleased with our performance this holiday selling season, especially given the supply chain challenges, as strong full-priced selling drove better than expected sales and profitability,” said Genesco chair, president and CEO Mimi Vaughn.

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