By Natalie Mojica

Retail sales rose by 3.8% in January, according to the Commerce Department. Spending at stores and online increased overall at the start of 2022, showing that U.S. consumers are more active as the Omicron variant wanes.   

Despite inflation, the economy saw increased jobs, wage gains, and profits at the start of 2022.  

“If you look at consumers’ financial position and the strength of the labor market, you have to say that in general, it’s pretty good,” Joshua Shapiro, an economist at Maria Fiorini Ramirez Inc., said. 

The report found an increase in motor vehicle and parts sales and overall core retail sales, which exclude cars, gasoline, building materials, and food services. Online retailers saw the biggest gain, with sales increasing 14.5%. The furniture industry saw a 7.2% spike, and the automotive sector went up 5.7%. Gas sales trailed behind, dropping 1.3%, and sales at bars and restaurants also declined 0.9%.  

Senior U.S. Economist at Capital Economics, Michael Pearce, said this is exciting news for the economy, especially after the standard set last December.  

“While the weak base from December still means first quarter consumption growth will be weak, the risks to our forecast [are] that it slowed to just 0.5% annualized on the upside,” Pearce said.  

However, this news comes as inflation sits at a 40-year high, and consumers are paying more for food, housing, energy, transportation, and other bills. Nevertheless, this hasn’t discouraged people from spending—a sign that the economy is on the road to recovery, according to Bill Adams, chief economist for Comerica Bank.  

Although U.S. consumer sentiment is falling, some consumers are taking advantage of increased inflation.   

Drew O’Shanick, an operations manager for a tech company, explained how he recently sold his used SUV that he bought at the beginning of the pandemic for the same price he purchased it at, despite adding 10,000 miles to the vehicle during his time using it. He also mentioned that while he’s noticing higher prices for everyday items, his pay has also increased.   

Overall, Federal Reserve officials highlighted the importance of shrinking their nine trillion-dollar asset portfolio to stabilize the economy at their Jan. 25 meeting, but inflation isn’t slowing down just yet. Suppliers continue to report increased prices, so consumers will have to shoulder the weight of higher costs for the foreseeable future.