WASHINGTON - Retail sales rose a strong 1.6 percent in January, their sharpest gain in more than a year, the government reported Tuesday. "Consumer spending is still alive," said John Silvia, an economist with Kemper Financial Services in Chicago.
The Commerce Department said sales totaled a seasonally adjusted $146.4 billion and posted their steepest increase since a 2.1 percent gain in October 1988.
December sales, which originally were said to be up 0.2 percent, actually fell 0.2 percent, dragged down by a 2.6 percent decline in automobile sales, Tuesday's report said.
But car sales, prompted by a renewed round of incentives that continued into February, were up 5.4 percent in January.
"The underlying strength is really quite remarkable," said David Jones, an economist with Aubrey G. Lanston & Co. in New York. "As long as consumers stay positive, since they account for two-thirds of GNP, the economy is likely to stay out of a recession."