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Retail Sales Probably Rose as U.S. Consumers Overcame Tax Rise

Retailers such as Gap Inc. and Target Corp. are getting a sales boost as job gains support disposable income, helping temper the effects of the tax increase last month. Photographer: Justin Sullivan/Getty Images
Retailers such as Gap Inc. and Target Corp. are getting a sales boost as job gains support disposable income, helping temper the effects of the tax increase last month. Photographer: Justin Sullivan/Getty Images

Feb. 13 (Bloomberg) -- Sales at U.S. retailers probably grew in January as an improving job market helped consumers overcome higher payroll taxes, economists said before a report this morning.

The projected 0.1 percent rise would follow a 0.5 percent December increase, according to the median forecast in a Bloomberg survey of 80 economists. Other reports may show import prices and business inventories climbed.

Retailers such as Gap Inc. and Target Corp. are getting a sales boost as job gains support disposable income, helping temper the effects of the tax increase last month. Higher property values and stock prices are also bolstering household resources and spending, which makes up about 70 percent of the economy.

The impact of the tax increase “remains uncertain because of other positive effects,” said Robert Dye, chief economist at Comerica Inc. in Dallas. “We’re seeing positive wealth effects from increased home prices and, to a lesser extent, from higher equity prices.”

The Commerce Department’s retail sales data is scheduled to be released at 8:30 a.m. in Washington. Estimates in the Bloomberg survey ranged from a drop of 0.7 percent to a gain of 0.6 percent.

Economists also project import prices climbed in January for the first time in three months as fuel costs rebounded. The Labor Department figures are also due at 8:30 a.m.

At 10 a.m., figures from the Commerce Department will show stockpiles climbed 0.2 percent in December following a 0.3 percent increase a month earlier, according to the Bloomberg survey median.

Chain Stores

Retailers last month were able to sustain holiday-season gains, figures released last week show. Same-store sales for the more than 20 companies tracked by researcher Retail Metrics Inc. surged 4.5 percent in January, the biggest year-to-year gain since September 2011.

San Francisco-based Gap, the largest U.S. apparel chain, posted an 8 percent gain in sales, double the average estimate of 4 percent in a survey by Retail Metrics. Minneapolis-based Target, the second-largest U.S. discounter, posted a gain of 3.1 percent, above projections of 1.7 percent.

Consumers are getting a lift from progress in the labor market even as Congress allowed the tax that funds Social Security to revert to its 2010 level of 6.2 percent from 4.2 percent starting in January. A worker earning $50,000 a year is taking home about $83 less a month because of the higher levy.

Payroll Gains

Employers added 157,000 workers in January after a revised 196,000 rise the prior month and a 247,000 surge in November, Labor Department data showed Feb. 1. Revisions added a total of 127,000 jobs in the last two months of 2012.

Demand for automobiles, as consumers replace older cars and trucks, is benefiting automakers such as Ford Motor Co. and General Motors Co.

Cars and light trucks sold at a 15.2 million annual rate in January after 15.3 million in December, according to data from Ward’s Automotive Group. Ford’s deliveries of cars and light trucks surged 22 percent last month and General Motors sales climbed 16 percent, the companies reported Feb. 1.

Households are trying to sustain gains after spending picked up at the end of 2012. Purchases climbed at a 2.2 percent annual rate in the final three months of 2012, up from 1.6 percent in the third quarter, Commerce Department data show.

While the improving job market will help, rising gasoline prices combined with the payroll tax increase and delayed income-tax refunds still represent hurdles.

The average price of a gallon of regular gasoline at the pump climbed to $3.60 on Feb. 11, the highest in almost four months, according to AAA, the biggest U.S. motoring group.

Additionally, the Internal Revenue Service did not begin accepting and processing 2012 returns until Jan. 30, later than its original Jan. 22 electronic filing start date, due to Congress’ last-minute Jan. 1 tax deal. That, combined with the IRS’s efforts to prevent fraud, may slow refunds.


                       Bloomberg Survey

================================================================
                            Import   Retail   Retail Business
                            Prices    Sales ex-autos     Inv.
                              MOM%     MOM%     MOM%     MOM%
================================================================
Date of Release              02/13    02/13    02/13    02/13
Observation Period            Jan.     Jan.     Jan.     Dec.
----------------------------------------------------------------
Median                        0.8%     0.1%     0.1%     0.2%
Average                       0.8%     0.1%     0.1%     0.2%
High Forecast                 1.2%     0.6%     0.6%     0.5%
Low Forecast                  0.2%    -0.7%    -0.9%     0.0%
Number of Participants          42       80       70       45
Previous                     -0.1%     0.5%     0.3%     0.3%
----------------------------------------------------------------
4CAST                         0.7%     ---      ---      ---
ABN Amro                      ---      0.1%     ---      ---
Action Economics              1.1%    -0.7%    -0.9%     0.0%
Ameriprise Financial          1.0%     0.3%     0.4%     0.0%
Banca Aletti                  ---      0.1%     0.1%     ---
Bank of the West              1.0%    -0.7%    -0.6%     0.2%
Bank of Tokyo-Mitsubishi      ---      0.2%     0.2%     0.2%
Banorte-IXE                   ---      0.1%     ---      ---
Barclays                      0.8%     0.1%     0.2%     0.0%
Bayerische Landesbank         ---      0.2%     0.2%     ---
BBVA                          0.4%    -0.1%    -0.2%     ---
BMO Capital Markets           0.8%     0.1%     0.2%     0.4%
BNP Paribas                   1.1%    -0.6%    -0.6%     ---
BofA Merrill Lynch            0.8%     0.1%     0.0%     ---
Briefing.com                  ---     -0.4%    -0.3%     ---
Capital Economics             ---     -0.3%    -0.2%     0.3%
CIBC World Markets            ---      0.0%     0.0%     ---
Citi                          0.6%     0.2%     0.3%     0.1%
ClearView Economics           0.6%     0.6%     0.4%     0.2%
Comerica                      0.5%     0.1%     0.2%     ---
Commerzbank AG                ---     -0.3%     0.0%     0.3%
Credit Agricole CIB           ---     -0.2%    -0.1%     0.2%
Credit Suisse                 0.8%     0.2%     0.3%     0.3%
Daiwa Securities America      ---      0.1%     0.2%     0.1%
Danske Bank A/S               ---      0.2%     0.2%     ---
DekaBank                      ---      0.2%     0.0%     0.3%
Desjardins Group              0.6%     0.2%     0.2%     0.0%
Deutsche Bank Securities      0.3%     0.0%     0.2%     0.1%
Deutsche Postbank AG          ---      0.1%     0.2%     ---
Fact & Opinion Economics      0.6%     0.0%     0.1%     0.3%
First Trust Advisors          0.9%     0.0%     0.5%     0.2%
FTN Financial                 ---     -0.1%     0.1%     ---
Goldman, Sachs & Co.          ---      0.0%     0.0%     ---
Hammer Partners SA            ---      0.0%     0.1%     ---
Helaba                        ---      0.0%     0.0%     0.3%
High Frequency Economics      0.8%     0.3%     0.4%     0.0%
HSBC Markets                  ---      0.2%     0.3%     ---
IDEAglobal                    0.6%     0.2%     0.3%     0.4%
IHS Global Insight            1.1%     0.0%     0.0%     0.3%
Informa Global Markets        0.6%     0.3%     0.4%     0.1%
ING Financial Markets         0.6%     0.2%     0.2%     0.4%
Intesa Sanpaolo               0.7%     0.2%     0.2%     ---
J.P. Morgan Chase             0.6%     0.1%     0.1%     0.1%
Janney Montgomery Scott       0.2%     0.2%     0.3%     0.3%
Jefferies & Co.               0.8%     0.2%     0.1%     0.1%
John Hancock Financial        ---      0.0%     0.0%     ---
Landesbank Berlin             0.6%     0.2%     0.5%     0.1%
Lloyds Bank                   ---     -0.1%    -0.1%     0.5%
Maria Fiorini Ramirez         ---      0.0%     0.0%     ---
MET Capital Advisors          ---      0.1%     ---      ---
Modal Asset                   ---      0.3%     ---      ---
Moody’s Analytics             0.8%     0.3%     0.3%     0.1%
Morgan Stanley                ---     -0.2%     0.1%     0.1%
National Bank Financial       ---      0.0%     0.0%     ---
Natixis                       ---      0.0%     0.1%     ---
Nomura Securities             0.4%     0.1%     0.2%     ---
Nord/LB                       0.9%     0.3%     0.2%     ---
Oxford Economics              ---      0.6%     0.4%     ---
Pierpont Securities           ---      0.1%     0.2%     ---
PineBridge Investments        1.2%     0.3%     ---      0.1%
PNC Bank                      ---      0.0%     0.1%     0.3%
Prestige Economics            ---      0.3%     0.1%     ---
Raiffeisenbank International  0.5%    -0.3%    -0.4%     0.2%
Raymond James                 ---      0.5%     0.3%     0.0%
RBC Capital Markets           ---     -0.3%    -0.2%     ---
RBS Securities                ---      0.1%     0.2%     ---
Regions Financial             ---      0.3%     0.2%     0.0%
Scotiabank                    ---      0.1%     0.1%     ---
SMBC Nikko Securities         1.0%     0.3%     0.1%     0.2%
Societe Generale              0.6%     0.4%     0.6%     0.0%
Southern Polytechnic State    ---     -0.3%     ---      ---
Standard Chartered Bank       0.6%     0.1%     ---      ---
Stone & McCarthy              1.0%     0.0%     0.0%     0.1%
TD Securities                 0.5%     0.1%     0.1%     0.4%
UBS                           1.2%    -0.1%     0.3%     0.0%
UniCredit Research            ---     -0.1%     ---      ---
Union Investment              ---      0.0%     ---      ---
University of Maryland        1.0%    -0.6%    -0.8%     0.2%
Wells Fargo & Co.             1.0%     0.1%     0.1%     0.3%
Westpac Banking Co.           0.9%     0.4%     ---      0.2%
Wrightson ICAP                0.8%     0.2%     0.2%     0.1%
================================================================

To contact the reporter on this story: Michelle Jamrisko in Washington at mjamrisko@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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