Americans bought a sweater or two, ate out a little more, purchased some gadgets and turned to the Internet in search of bargains in January. These small indulgences provided some relief to suffering stores, boosting retail sales 1%.
The unexpected increase from December, reported by the Commerce Department on Thursday, reversed a six-month decline and marked the biggest increase in 14 months.
But with nearly 5 million Americans still drawing unemployment benefits late last month and the specter of more layoffs to come, economists believe the reversal is unlikely to last. In a sign of how fearful businesses are, they slashed inventories in December by the biggest amount in seven years -- potentially triggering further cutbacks in production and more layoffs.
Clearly, however, any lift in spending is worth watching.
"Consumers began to treat themselves a little better," said Joel Naroff, president and chief economist at Naroff Economic Advisors Inc.
Whether this is a sign of a thaw in consumer spending or a blip, he won't know for a few months, he said. But consumers, shell-shocked since the financial meltdown in September, may be moving from "doing nothing to doing a little something," he said.