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Armed with cash, American shoppers trudged through rain, sleet and snow to pile into malls and stores in January.

Recent data from retail industry watchers show that the first month of 2000 was yet another shopaholic month for consumers, whose appetite for goods and services has been the centerpiece of the record 107-month U.S. economic expansion.

The government will release its own report on January

retail sales

on Feb. 11, but the two reports this week have raised expectations the January will post a solid gain in sales.


Bank of Tokyo-Mitsubishi

tally of 67 retail chain stores showed that January sales rose 5.4% from the comparable month in 1999. While that gain is strong in itself, it compares to an already stellar 8.2% year-over-year rise in January 1999.

Meanwhile, a report by

LJR Redbook

, a unit of New York-based

Lynch Jones & Ryan

, which tracks the retail industry, showed a 5.1% gain in January retail sales.

A BTM senior economist, Mike Niemira, said the sharp rise in year-over-year January sales is surprising. "We saw a very strong gain for the month, even with a number of factors in place that should have made things weaker," he said, noting that stormy winter weather in the Northeast and other parts of the country "didn't have the typical chilling effect on store sales."

Several retailers reported that sales grew much faster than they typically do in January. On the whole, discount stores and apparel retailers showed the largest gains of 22.3% and 19.4%, respectively. Notable names in those categories included



, which posted a 27.6% gain, and



, which rose a dizzying 36%. Some national department stores also advanced, like

JC Penny


, which posted an 8.8% increase in January sales.

The major reason cited for the burst of January sales is that consumers flocked to postholiday clearance sales. "Several retailers in January posted unexpectedly large annual growth rates, suggesting aggressive discounting," said John Pitt, director of LJR Redbook.

But that may not tell the entire story, because many shops had fewer items to mark down after consumers staged one of the best holiday shopping seasons in years.

The real reason for a burst in January sales may lie with consumers themselves. Fueled by rising compensation and wages, and the relentless pace of the stock market, American consumers have a lot of money to throw around.

They must be spending a lot of money in stores, because they are certainly not stowing it away. The government recently reported that the country's savings rate -- the difference between what people make and what they spend -- fell to an all-time low of 2.4% in 1999.

The fact that Americans are spending more than they earn is a reflection of consumers' ever-growing confidence in the economy. Recent measures by the

University of Michigan

, the

Conference Board

, and

ABC/Money Magazine

showed that consumer confidence has recently risen to all-time highs.

Consumers with lots of cash and lots of confidence are what every shopkeeper dreams of. But economists fear that ever-growing demand will lead to inflation. Common wisdom says that when more and more dollars are chasing the same amount of goods and services, prices will rise.

So far, however, there have been scant signs of widespread consumer inflation. The

Consumer Price Index

rose 2.7% in 1999 -- considerably higher than the 1.6% recorded in 1998, but well below the 5% levels seen early in the 1990s. Moreover, the 1999 acceleration was largely a result of a 30% jump in gasoline prices, primarily because of production cuts by the

Organization of Petroleum Exporting Countries

, or OPEC.

Most economists say a huge corporate investment in computer technology in recent years has enabled companies to get more out of each worker, allowing them to grow considerably without increasing the cost of their products.


Federal Reserve

policymakers have harped on the fact that there is a real potential for inflation, and they are acting to prevent it. On Wednesday, they raised short-term interest rates by a quarter percentage point, following three similar increases last year, in hopes that more restrictive access to capital will slow spending by consumers and companies.

But the Fed has yet to see any slowdown in demand. After announcing the rate increase, the central bankers said in a statement that they "remain concerned that over time, increases in demand will continue to exceed the growth in potential supply, even after taking account of the pronounced rise in productivity growth."

This has led to a general feeling that Fed policymakers will continue to raise rates until they are assured that spending, and the economy in general, is slowing.