Mixed Economic Data: Solid Numbers on Employment and Inflation, Retail Sales Weak

By SBE Council at 13 February, 2026, 4:42 pm

by Raymond J. Keating -

This past week, disappointing data on retail sales was followed by fairly solid numbers on both employment and inflation.

Bad News on Retail Sales

Retail and food services sales growth in December 2025 came in flat at 0.0 percent, according to the latest report from the U.S. Census Bureau. Factor inflation in, though, and December experienced a real decline in retail and food services sales.

From a year earlier, retail and food services sales grew by 2.4 percent. Again, however, these are nominals dollars. So, when the inflation rate of 2.7 percent is considered, real sales declined for the year.

Solid News on Jobs

Meanwhile, the employment report for January 2026 from the U.S. Bureau of Labor Statistics showed a gain of 130,000 in the establishment survey's nonfarm payroll employment. After rather poor numbers for 2025 (only +15,000 per month on average), this was the largest monthly gain since December 2024.

Total employment via the household survey, which better captures startup and small business activity and is generally more comprehensive (also more volatile month to month, however), showed a big gain of 528,000 in January. For good measure, the labor force grew by 387,000.

The labor force participation rate inched up from 62.4 percent in December to 62.5 percent in January, while the employment-population ratio increased from 59.7 percent to 59.8 percent.

Generally Good News on Inflation

Finally, the U.S. Bureau of Labor Statistics reported improvement in Consumer Price Index inflation, going from 0.3 percent in December to 0.2 percent in January. Also, for the past year, CPI inflation came in at 2.4 percent. These are welcome numbers given our ongoing bout with inflation over the past five years.

The more recent the inflation data, the more relevant, and there are still some unknowns - given the October and November lack of data - with the government shutdown. In the end, though, much headway has been made in reining inflation in. Of course, work remains. Indeed, the Fed needs to be ever-vigilant when it comes to its role in maintaining price stability.

Key takeaways from this week's numbers on the economy are that recent jobs and inflation data were better than expected, while consumer worries can be seen translating into the actual retail sales data.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. He is the author of " The Weekly Economist " book series, and 10 Points from Walt Disney on Entrepreneurship .