Retail Sales Stay In Soft Patch Despite Improving Fundamentals
A strange brew of economic data continued to bubble today as retail and food service sales fell for the third consecutive month in February, possibly due to severe weather. But that comes despite an improving labor market and other signs that the economy continues to expand. As consumer spending remains solid, researchers at the American Institute for Economic Research suggested a rebound is likely in the coming months.
According to data released this morning by the Commerce Department, retail and food sales fell for the third consecutive month in February, declining 0.6 percent, after a 0.8 percent decline in January. Still, year-over-year, sales increased a modest 1.7 percent.
Theodore Cangero, an AIER senior research analyst, noted that sales have been sluggish despite an improving labor market, rising consumer confidence and lower gasoline prices, with weather as the likely culprit. He noted that the weakness in discretionary spending was broad based, falling 1.5 percent, as Americans trimmed spending on home furnishings, building supplies, and electronics and appliances. Spending at food service and drinking places also declined, Cangero said.
Spending on staples — the basic necessities of life, such as food — increased 0.5 percent, including a 0.5 percent rise in spending at grocery stores. Another necessity of life, gasoline, led the way in the staples category, with a 1.5 percent jump in sales. Much of that gain in gasoline sales was likely due to a 13.2 percent jump in prices.
Health and personal care stores, a bright spot in recent months, declined 0.7 percent, but have increased 4.8 percent year over year.