San José, CA – On Friday, February 14, the Department of Commerce released its report on Retail Sales for January 2025. For those hoping for a strong report on Valentine’s Day, there was no love as retail sales fell 0.9%. While this report was seasonally adjusted for the fact that sales in January are typically lower than December, it is not adjusted for inflation. With inflation up 0.5% in January according to the Department of Labor’s report earlier in the week, it is likely the real, or inflation adjusted sales fell more than 1% in one month, a very weak report.

While natural disasters such as the fires in southern California and the winter storms in the Midwest and Northeast were seen as pushing sales down 0.2%, the actual report was much worse. The so-called “Trump Bump” of optimism seen in the stock market and retail sales at the end of 2024 had completely fizzled out. One reason for this was that more and more households were stretched because of higher prices and have had to borrow more and more. Delinquencies, or late payments on loans, rose across all categories except for student loans, showing that more and more people had taken on too much debt to try to keep up with rising prices.

Higher inflation and falling sales in January do not foretell a good year for the economy. While Trump promised lower prices “on day one,” he is now blaming all the economic problems on President Biden. While this may have some truth since most of January was still under the Biden administration, going forward, the economic polices adopted in Washington DC will be Trump’s responsibility.

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