- Associated Press - Tuesday, February 14, 2012

WASHINGTON (AP) — Americans rebounded from a weak holiday season and increased spending on retail goods in January, an encouraging sign for the strengthening economy.

Retail sales rose at a seasonally adjusted 0.4 percent last month, the Commerce Department said Tuesday. Consumers spent more at restaurants and bars and on electronics, home and garden supplies, and sporting goods at department and general merchandise stores.

Consumers spent less on cars in January, the report showed, even though automakers previously reported higher sales in January. That suggests dealers offered discounts in order to boost sales. Low interest rates, better loan availability and new car models have helped drive sales higher in the past three months.

The overall January figure was an improvement from December, which was revised downward to show a flat reading. And when excluding autos and gasoline station sales, retail spending jumped 0.6 percent — the best showing in three months.

The government’s retail sales report is its first look each month at consumer spending, which represents 70 percent of economic activity. The positive data suggest that hiring gains have encouraged more people to spend, which should lead to stronger growth.

Retail sales have risen about 21 percent since hitting a recession low, and they’re nearly 6 percent above their pre-recession high.

Sales at gasoline stations rose 1.4 percent last month, the most in 10 months. Gas prices have risen steadily in recent months. The average price for a gallon of gas was $3.51 on Monday, up 12 cents from a month earlier.

Earlier this month, big chain retailers reported a solid increase in January sales. The gains weren’t evenly spread. Lower-priced stores such as Target and Costco reported big gains. Macy’s and other stores that sell midpriced goods didn’t do as well.

The government’s monthly report is a broader gauge of retail sales. It covers purchases at all retailers, including auto dealerships, restaurants and bars, grocery stores and gasoline stations.

Consumers are taking on more debt after cutting back in the aftermath of the recession. Consumer borrowing, which includes credit cards, auto loans and student loans, posted the biggest monthly gains in a decade in November and December.

The increases suggest consumers are more confident about the economy, but they could also mean that some are increasingly reliant on credit as wages have failed to keep up with inflation in the past year.

Hiring has picked up in recent months, which could support more spending. Employers added 243,000 net jobs last month, the fifth straight month of solid hiring.

The economy, meanwhile, expanded at an annual rate of 2.8 percent in the final three months of last year. Growth may slow a bit from that pace in the current quarter. Many economists forecast modest growth of 2 percent to 2.5 percent this year.

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