Despite the impending fiscal cliff, consumer spending turned out to be higher than expected this holiday season. The U.S. Commerce Department reported this morning that retail sales actually increased by a half percent last month.
What encouraged Americans to keep buying? Juli Niemann, an analyst with Smith Moore and company explains: "Well you have a case of retailers are always talking like farmers, there's no such thing as a good crop, but this year actually turned out pretty decently." Niemann attributes the unexpected cosumer behavior to two main factors: steady personal income rates, and a decline in fuel prices. "This is the third month we've seen gasoline prices go down."
But the question remains, how long can retail sales continue?
Niemann says we'll have to wait and see. "We're still in a replacement cycle and a lot ... of the retail recovery has been weather damage recovery," which could continue to affect retailers, especially on the eastern seaboard.
To hear more and learn about signs of possible recovery in the housing market last month, click on the audio player above.