Retail sales fall 0.8% in January from December as shoppers take a break after strong holiday season

Americans took a break from spending in January after splurging during the holiday season

Americans took a break from spending in January 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%.

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.

Business at clothing and accessory stores was down 0.2%. Sales at building materials and supplier suppliers fell 4.1%, reflecting a still weak housing market. Online sales fell 0.8%. Business at restaurants were up 0.7%