Dive Brief:

• The National Retail Federation looked to put a positive spin on January's retail sales numbers from the U.S. Department of Commerce, which marked the lowest drop in 11 months. The NRF noted the core sales number — excluding automobiles, gasoline stations and restaurants — dropped 0.26%, seasonally adjusted, from December to January, and rose 5.4% percent year-over year, the NRF said Wednesday.

• The NRF’s assessment of core retail growth is based on numbers released earlier Wednesday from the U.S. Commerce Department. Retail sales, including auto and fuel sales, fell 0.3% in January from December, but rose 3.9% from the year-ago period. 

• The results comes as NRF forecasts 2018 retail sales growth of between 3.8% and 4.4% over 2017. Kantar Consulting forecasts similar retail sales growth, at 4.3% in 2018. That marks an improvement from 2017’s annual pace of 3.8% but is slower than the 5.2% pace posted in the holiday fourth quarter, according to a Kantar note emailed to Retail Dive.

Dive Insight:

NRF Chief Economist Jack Kleinhenz on Wednesday dismissed the gloomy analysis from many quarters after the release of the Commerce Department’s number-crunching.  

Kleinhenz said that robust economic fundamentals, including higher employment, a tightening labor market and positive wage growth, are all in place. Plus, he added, some amount of down-shift in January is to be expected, especially after healthy spending over the holidays. (A year ago, however, retail sales rose 0.4% from December 2016 to January 2017.)

Holiday sales increased a record 4.9% this year, according to the holiday Mastercard SpendingPulse report, the largest year-over-year increase since 2011. E-commerce sales soared 18.1% over last year thanks in part to a late-season surge, according to the report, which details holiday sales from Nov. 1 through Dec. 24 across all payment types.

"Some observers are spinning this as a disappointing month, but you’ve got to keep in mind that we’re coming off one of the strongest holiday seasons in years," Kleinhenz said in a statement, adding that it’s difficult to draw conclusions from month-to-month changes because of huge seasonal-adjustment factors. 

But if retailers thought the optimistic consumption over the holidays portend smooth sailing in 2018, they may need to think again. There are enough unknowns for consumers to create uncertainties for retailers, according to Kantar Consulting Principle Economist Doug Hermanson, who sees the economy as "returning back to the reality of modest wage growth and rising costs for shoppers in the New Year after dipping heavily in to their savings and available credit to splurge on holiday gifts."

Tax cuts, trickling in to some shoppers’ paychecks in February, will firm up growth, but shoppers will initially use most of that extra cash to recoup savings and pay down debt, he also said.

Indeed, consumer confidence may be somewhat overstated, considering how over-leveraged many consumers are, according to a Consumer Financial Stress Index from legal services company LegalShield emailed to Retail Dive.

"Our data continues to indicate that consumers are right to feel good about their current financial situations and the overall economy in the first half of 2018, despite high consumer debt levels and a 12-year low in the personal savings rate," James Rosseau, LegalShield chief commercial officer, said in a statement. "The housing sector will be a key wild card to watch for the U.S. economy in 2018."