Treat Yo’self — When it comes to the U.S. economy, consumers run this sh*t. Spending by regular ol’ Americans drives nearly 2/3 of total GDP, and in this past month, we consumers really came in strong. 

Retail sales, a proxy for consumer spending, jumped 3.8% in January, while figures for the month of December were revised down from a 1.9% drop to a 2.5% drop. Kind of a good-news-bad-news vibe, but given that economists had been expecting growth to clock in at 2%, at least we get to mock their inaccuracy. 

However, seeing a jump like this in January is strange. Typically, spending slows after the busy holiday shopping season in December, especially in the market for big-ticket items like cars. But as we’ve learned throughout the pandemic, nothing is typical anymore. 

Analysts say that motor vehicle sales last month likely did not decline as much as usual from December to January, largely thanks to a lack of semiconductors, transportation, and patience.

More importantly, core retail sales (stripping out cars, gasoline, building materials, and food) jumped even more last month, gaining 4.8%. This is the part that actually matters. Core retail spending is much more closely aligned with the consumer spending data that goes into GDP calculations.

Don’t be dazzled by the high, flashy number yet. Inflation is still very much a thing. Prices were elevated well over 7% from a year prior last month, meaning the spending bump could very well be a result of inflation rather than pure, Adam Smith-style economic growth. 

So do your part and go out and spend that cash. You’re not “wasting money” or even “treating yourself.” No, you’re contributing to the economy. And the economy thanks you.

THE SOCIAL NETWORK
FOR SMART MONEY INVESTORS