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WASHINGTON -- Retail sales rose 0.3 percent in January, an unexpected pickup after a 0.4 percent decline a month prior, which was partly due to stronger new car and gasoline sales, Reuters reported, citing a recent Commerce Department report.
The rise in retail sales was contrary to Wall Street analysts' forecasts for a 0.2 percent decline in January, according to the report. Excluding new car sales, January sales still rose 0.3 percent, and excluding gasoline, January retail sales rose 0.1 percent.
While gas sales rose 2 percent in January after a flat December, the gain could reflect increased sales prices, not necessarily an increase in volume, according to the report.
Meanwhile, there were declines in many categories -- furniture sales fell 0.5 percent; building material sales were down 1.7 percent; and department store sales declined 1.1 percent -- implying consumer spending was being pinched, Reuters reported.
In other news, President Bush signed into legislation Wednesday a $168 billion economic stimulus package that will grant tax rebates up to $600 for working individuals; $1,200 for married couples plus an additional $300 per child for families; along with incentives for business investments, The Associated Press reported.
The National Retail Federation (NRF) praised the signing and the speed at which Congress and the president passed the legislation. "It was less than a month ago that President Bush urged congressional leaders to set aside partisan differences and work together to help the U.S. economy and American families," NRF senior vice president for government relations, Steve Pfister, said in a statement. "To see a bill signed into law this soon is almost unprecedented. This fast action shows the urgency of this issue and the commitment the White House and the leaders of both parties in the House and Senate were willing to make to give our economy the shot in the arm it so badly needs."
In related news, an updated gas price forecast by the federal Energy Information Administration (EIA) attributed slim petroleum supplies as the reason gasoline prices will break records this spring when they reach a national average of $3.40 a gallon, the Kansas City Star reported. The record gas price was set last May at $3.23.
The estimate comes at a time when the economy is slowing, which could weaken energy demand and cause prices to soften; however, the EIA also cited an unusually high number of refinery outages or other disruptions, which could push prices higher.
"Volatility is part of the picture," Neil Gamson, an EIA analyst, told the newspaper.
While gas prices could ease after the spring surge, per-gallon retail averages are expected to be about 26 cents higher in 2008 than the $2.81 average during 2007, the report stated. In addition, the EIA's longer-term forecast shows average gas prices at $3.08 a gallon in 2009, according to the report.