What's going on?
Data out on Wednesday showed that US retail sales rose by the most in 10 months in January, even as one big nuisance keeps pestering the country’s shoppers.
What does this mean?
Inflation or no inflation, retail sales in the country were 3.8% higher last month than the month before – well up on the 2% that economists were expecting, and a long way from December’s 2.5% drop. Americans seem to have stuck to their online shopping habits, with so-called “nonstore retailers” posting a 15% gain. But they seemed keen on furniture and cars too, whose sales were up around 7% and 6% respectively. And while it’s true that restaurant and bar sales fell almost 1%, that shouldn’t worry anyone too much: there are only so many cocktail nights you can have when record Covid cases cause a new batch of restrictions, after all…
Why should I care?
The bigger picture: This might not last long.
Shoppers might already be getting buyers’ remorse: data out last week showed US consumer sentiment – a measure of how the public feels about their finances and the wider economy – is now at its lowest in over a decade. That stands to reason: more and more companies are raising their prices to balance out their own higher costs, while the US government is bringing its support packages to an end – both of which will limit how far the average shopper’s money will go.
Zooming out: Turn off your screens.
This online shopping boom has worked out well for Shopify: the ecommerce platform reported on Wednesday that it processed 32% more in sales last quarter than the same time in 2020, helping boost total quarterly revenue by a better-than-expected 41%. That pushed its revenue for last year up 57%, but it’s not feeling so good about this one: it’s expecting shoppers to keep swapping screens for stores as the pandemic continues to fade.