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U.S. retail sales - which account for 70% of economic activity - unexpectedly fell 0.4% for the month of January according to the Commerce Department today (Thursday). The decline marks the second straight drop after a 0.1% fall in December.
Auto sales were the major contributor to the miss. Sales of motor vehicles and parts dropped 2.1%, while Americans also spent less on restaurants and clothing. The report also showed soft holiday sales for retailers at the end of last year.
Meanwhile, sales in December were revised from the previously reported 0.2% rise to instead reflect a 0.1% drop. "Core sales" - when you remove automobiles, gasoline, building materials, and food services from the mix - fell 0.3% in December.
Even November's 0.4% gain was revised downward to a 0.3% gain.
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Foul weather is a main cause of the U.S. retail sales decline.
"The weakness we saw in retail sales is unfortunately weather-related and we are clearly seeing that the first quarter growth is slower than we anticipated," chief market strategist for Rockwell Global Capital Peter Cardillo said to Reuters.
Just this week, more than 100 million people from Texas to Georgia, New York, and Massachusetts are being affected by a winter storm the National Weather Service is calling "a historic, catastrophic event."
As of 1:30 p.m. EST today, 6,361 flights have been canceled across the United States, and 4,031 flights have been delayed. Factories are shutting down production, and customers are staying home instead of shopping.
But even though bad weather has a negative impact on U.S. retail sales, it can be a boon for investors.
Yesterday, Money Morning Chief Investment Strategist Keith Fitz-Gerald appeared on FOX Business' "Varney & Co." and disclosed how foul weather can be a good thing for investing:
Today's disappointing U.S. retail sales report made for a lower opening on Wall Street, as the Dow Jones Industrial Average shed over 80 points in early trading before recovering its losses.
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