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January retail sales lower than expected

Retail sales in the U.S. were up just 0.4 percent last month, which is lower than expected.

Jeremy Hobson: The government said this morning that retail sales inched up 0.4 percent last month. That was lower than expected.

And it's where we will start now with Juli Niemann, analyst at Smith Moore and Company. She's with us live as always from St. Louis. Good morning, Juli.

Juli Niemann: Good morning.

Hobson: So what does this morning's retail sales number -- up 0.4 tenths of a percent -- mean for our economy?

Niemann: Oh, it's just not as much up as hoped. The pattern was still the same though -- the disappointment was in automotive, and that was probably just a temporary low. Fleet sales were down; dealers are still very promotional. But the rest went really as expected with the retail pattern continuing. High-end did very well, low-end did well. Your valentine loot today probably came from either Tiffany's or the dollar store.

So the middle market retailers -- are still continuing to really struggle, and that's Sears, JC Penney's, Macy's. So Americans really are back at the shopping malls; but they're power walking, not power shopping. And it's going to stay this way until we see all this huge amount of consumer debt paid down.     

Hobson: And Juli, what about the other big thing we spend money on -- gas. And gas prices have risen up to $3.52 a gallon, which I gather is quite high for this time of year.

Niemann: Well it is. Oil had been going down due to a mild winter. And typically in winter, nobody's driving much either. So inventories were running pretty lean here. We had a couple things happen: first, tensions in the Middle East, once again. But a lot of the old teapot refineries have been shut down, and we don't have a lot of excess refining capacity out there. So that little boost there really caused an uptick in prices here.

Demand is still very stable; it's not rising significantly. Moreover, consumers have shown that when they see prices going up, they stay home -- and prices start to ease off then. So the price of gasoline is really going to be dependent upon what happens in the Middle East. We've been here before.

Hobson: Juli Niemann, analyst with Smith Moore and Company, thanks as always.

Niemann: You bet.

About the author

Juli Niemann is executive vice-president for research and portfolio management with Smith, Moore and Company.

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