WASHINGTON — Retail sales posted a surprising rebound in January following a dismal December, although much of the strength reflected rising gasoline prices. Economists saw the increase as a temporary blip rather than a sustained recovery.
The Commerce Department reported Wednesday that retail sales rose by 0.3 percent last month after having fallen by 0.4 percent in December as retailers suffered through their worst Christmas shopping season in five years. The increase was led by higher demand for new cars and a big jump in sales at gasoline stations that primarily reflected rising pump prices.
On Wall Street, the better-than-expected reading on retail sales helped lift spirits by easing concerns about the severity of the economic slowdown. The Dow Jones industrial average rose 178.83 points to close at 12,552.24.
But the positive retail number did little to change the view of economists who are forecasting the economy will fall into a recession in the first half of this year. They said the slump should be shorter and milder given that Congress quickly passed, and President Bush signed on Wednesday a $168 billion stimulus package designed to jump-start growth by showering consumers with rebate checks starting in May.
Economists had predicted a 0.3 percent decline in January sales.
The economy is being aided by aggressive interest-rate cuts delivered by the Federal Reserve, which slashed a key interest rate by 1.25 percentage points in January, the biggest one-month reduction in rates in a quarter-century.
Federal Reserve Chairman Ben Bernanke is scheduled to testify before the Senate Banking Committee today, and his testimony will be closely watched for any signals he may give about future rate cuts.
