Businesses, consumers give economy a boost

WASHINGTON - American businesses and consumers are giving the economy a boost by spending more, but the troubled housing market remains an obstacle, new data show.

Consumers bought more from retailers for a seventh straight month in January. Gains came despite snowstorms that limited spending from workers with more money in their paychecks from a Social Security tax cut.

Businesses increased their stockpiles in every month last year, a sign that companies expect sales to remain healthy.

Retail sales rose 0.3 percent last month to $318.6 billion, the Commerce Department said yesterday. Sales have risen more than 14 percent from the recession low in December 2008.

People spent more at department stores and on electronics while also paying higher prices for gas. Online sales increased at a healthy pace.

But harsh winter weather slowed car sales, which ended up rising only 0.5 percent after a 1.5 percent gain in December.

As part of the broader consumer picture, Laura Gurski, a partner at A.T. Kearney, says she believes the January government sales reports showed the Social Security tax cuts are helping to lift sales at grocery stores.

"Consumers are spending [the extra money] on the basics," she said. But she added they're not buying big-ticket items.

Part of the overall retail sales gain last month reflected higher gasoline prices. Sales at gasoline service stations climbed 1.4 percent. Excluding the rise at gas stations, retail sales would have risen 0.2 percent last month.

Businesses appear to expect consumers will keep spending. Companies added to their stockpiles for a 12th consecutive month in December, the Commerce Department said. That suggests further growth at U.S. factories that could lead to more hiring in the months ahead.

But those jobs are unlikely to come from home builders, who remain pessimistic after the worst year for new-home sales in nearly a half-century.

The National Association of Home Builders said Tuesday that its index of builder sentiment remained unchanged in February for the fourth-straight month at 16.