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TODAY’S HEADLINE STORY: Retail sales increase in January confuses economists

Friday, February 13th, 2009

After six consecutive months of declines, sales at U.S. retailers rose unexpectedly by 0.9 percent in January, according to a report released by the U.S. Commerce Department on Thursday. Experts had projected a 0.8 percent decline in January, making the small turnaround a bit of a surprise.

2009-02-13-retail-resilience-copy.jpg“Even with those month-over-month gains, retail sales were down 9.7 percent from January 2008, reflecting lower gas prices and how drastically consumers have cut back their spending as they worry about pay freezes and mounting job losses,” The New York Times reported Thursday. “The increase in January follows a downwardly revised 3 percent decline in December that marked the end to a brutal holiday season for most retailers. Profits dwindled as stores offered big discounts to entice reluctant shoppers.”

Brian Dolan, chief currency strategist at in Bedminster, N.J., told USA Today of the sales increase: “It is the sort of tonic that can sooth the market to an extent. We’ve been keying on things not necessarily getting better but at least deteriorating at a slower rate. And this builds that case.”

The indoor tanning market reported this week in a owner’s poll published Tuesday that 63 percent thought that business in January met or exceeded expectations, with 39 percent reporting that business exceeded expectations.

“Some economists are saying that January’s rebound reflects deep discounts following the Christmas season and slightly higher gas prices as compared to December, but others see it as a sign of consumer resiliency,” Smart Tan Vice President Joseph Levy said. “The cover story in this month’s Tanning Trends magazine (read it here on looks at how many Smart Tan member facilities are preparing for the season with the economy in mind.”