Mitch's Mailbox

February 22nd, 2024

January’s Economic Struggles: What Lies Beneath The Numbers?


Vanessa M. from Owensboro, KY asks: Hello Mitch, I’ve seen a lot of commentary recently about the economy being weak in January. Is more context needed? Or could this be the beginning of a negative trend for the economy? Thank you for your time.

Mitch’s Response:

Thank you for writing, Vanessa. I know what data you’re referring to, and the short answer is yes – more context is needed.

I would say that economic data in January looked weak and/or undesirable on three fronts: retail sales, industrial production, and inflation as measured by the consumer price index (CPI). If you look at these three data points in a vacuum, the U.S. economy stumbled last month.

Let’s start with retail sales. The Commerce Department reported that retail sales fell -0.8% month-over-month in January, which was more than twice the forecast -0.3% decline.1

The context needed here is that we largely expect January retail sales to be weak following the holiday shopping season, as consumers take a break from spending. It’s worth noting, too, that holiday shopping was quite strong in 2023—the National Retail Federation reported a 3.8% increase with e-commerce sales growing 8.2% year-over-year. We also saw that spending at restaurants and bars rose 0.7% month-over-month in January, and was 6.3% higher in 2024 than in 2023. This data in particular, in my view, shows consumers are still willing to spend, they just pulled back in certain areas.

How to Avoid Financial Pitfalls in this Market

In such a volatile market, it’s normal to feel overwhelmed when managing your finances, especially with the sea of conflicting advice flooding the internet. In times of uncertainty and fear, it’s crucial to embrace financial clarity.

I’m offering our guide, Debunking Common Financial Myths, which helps familiarize long-term investors with common myths and pitfalls that can derail your journey to success, including:

• Retirees should get out of stocks completely
• It’s essential to watch the daily movements in the stock market
• Financial advisors always have your best interests in mind
• And more…

If you have $500,000 or more to invest, download our free guide below!

Get our FREE guide: Debunking Common Financial Myths2

Another bit of context on retail sales is that January was an exceptionally cold month across the U.S., with many parts of the country experiencing severe winter weather, travel delays, school closures, etc. These factors can of course impact spending.

Next is industrial production. The Federal Reserve data released in January showed production falling -0.1% when most economists were expecting a +0.2% jump. This underscores softness in manufacturing, which does not necessarily factor as ‘new news.’ U.S. manufacturing has been in a weak patch for the better part of a year, and it is not a very significant contributor to total U.S. output. A majority of U.S. economic output comes from services and spending, not manufacturing.

Even still, there are a couple of bright spots to point out. Fed surveys of manufacturing activity in the New York and Philadelphia areas looked strong, and semiconductor facilities and production are starting to see more activity. The U.S. produced about 20% more semiconductors in January compared to last year, a solid jump and a nod to the transition to high-tech manufacturing that’s underway.

Finally, there was the hotter-than-expected inflation print. Headline CPI registered at 3.1% year-over-year in January, which was materially higher than the consensus for a 2.9% increase. I’d add two pieces of context here. First, January’s CPI print was still an improvement from December’s, which came in at 3.4%. Second, a major component of the CPI calculation is sheltering costs, which accelerated 0.6% in January from December, compared to December’s 0.4% increase. I expect shelter costs to contribute less to inflation data as the year progresses, and it’s also worth noting that the Fed’s preferred inflation gauge, the PCE price index, places a smaller weight on housing costs. I therefore don’t see January’s CPI data as having a meaningful effect on monetary policy this year.

Amidst recent market shifts, it’s essential to maintain perspective by navigating through these fluctuations with informed decision-making.

If you’re looking for other investing tools to help shape your financial portfolio, I’m offering our guide, Debunking Common Financial Myths3, which helps familiarize long-term investors with common myths and pitfalls that can derail your journey to success.

This guide covers a few myths, such as:

• Retirees should get out of stocks completely
• It’s essential to watch the daily movements in the stock market
• Financial advisors always have your best interests in mind
• And more…

If you have $500,000 or more to invest, I recommend downloading your free guide today!


1 Wall Street Journal. February 16, 2024.

2 ZIM may amend or rescind the “The Zacks Bear Market Survival Kit.” guide for any reason and at ZIM’s discretion.

3 ZIM may amend or rescind the “The Zacks Bear Market Survival Kit.” guide for any reason and at ZIM’s discretion.


Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.

Zacks Investment Management, Inc. is a wholly-owned subsidiary of Zacks Investment Research. Zacks Investment Management is an independent Registered Investment Advisory firm and acts as an investment manager for individuals and institutions. Zacks Investment Research is a provider of earnings data and other financial data to institutions and to individuals.

This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. Do not act or rely upon the information and advice given in this publication without seeking the services of competent and professional legal, tax, or accounting counsel. Publication and distribution of this article is not intended to create, and the information contained herein does not constitute, an attorney-client relationship. No recommendation or advice is being given as to whether any investment or strategy is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole.

Any projections, targets, or estimates in this report are forward looking statements and are based on the firm’s research, analysis, and assumptions. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. All expressions of opinions are subject to change without notice. Clients should seek financial advice regarding the appropriateness of investing in any security or investment strategy discussed in this presentation.

Certain economic and market information contained herein has been obtained from published sources prepared by other parties. Zacks Investment Management does not assume any responsibility for the accuracy or completeness of such information. Further, no third party has assumed responsibility for independently verifying the information contained herein and accordingly no such persons make any representations with respect to the accuracy, completeness or reasonableness of the information provided herein. Unless otherwise indicated, market analysis and conclusions are based upon opinions or assumptions that Zacks Investment Management considers to be reasonable. Any investment inherently involves a high degree of risk, beyond any specific risks discussed herein.

The S&P 500 Index is a well-known, unmanaged index of the prices of 500 large-company common stocks, mainly blue-chip stocks, selected by Standard & Poor’s. The S&P 500 Index assumes reinvestment of dividends but does not reflect advisory fees. The volatility of the benchmark may be materially different from the individual performance obtained by a specific investor. An investor cannot invest directly in an index.

Questions posed are for demonstrative and informational purposes only and may not reflect the views of current clients or any one individual.
Rate Cuts May Be Pushed Back, Shoppers Retreat, Oil Market Uncertainty
Inflation In January: A Closer Look At Its Impact And Implications

Explore Zack’s Archives

Mitch's Mailbox
April 17th, 2024
Apple’s Antitrust Lawsuit And The Regulation Of Tech
Read more
Private Client Group
April 16th, 2024
Inflation Nears Fed target, Services Sector Expands In March, Signs Of Housing Recovery
Read more
Mitch on the Markets
April 15th, 2024
Oil Prices Are Rising Fast—Should Investors Be Worried?
Read more
Mitch's Mailbox
April 10th, 2024
How To “Spring Clean” Your Finances
Read more
Private Client Group
April 9th, 2024
Getting Closer To 2% Inflation, U.S. Sector Expands, And An Update In The U.S. Housing Market
Read more
Mitch on the Markets
April 8th, 2024
Looking To Elevate Your Investments With Fewer Decisions? Read This.
Read more

Daily financial tips directly
from the Zacks family.




I'm a Private Client I'm a Financial Professional