Daily Local News (West Chester, PA)
February retail sales up 0.6%, but fissures emerge
NEW YORK >> Americans picked up their spending a bit in February after pulling back the previous month. But last month’s gain was weaker than expected, and January’s decline was revised even lower, suggesting that many are growing more cautious with their money.
Retail sales rose 0.6% last month after falling a revised 1.1% in January, dragged down in part by inclement weather, according to the Commerce Department’s report on Thursday.
February’s number was also lifted in part by higher gas prices as well as higher auto sales and a rebound in building materials, which were depressed by severe weather during the prior month. Excluding sales from gas stations and auto dealers, sales rose 0.3%.
The national average gas price Thursday was $3.41 per gallon, per AAA, up from $3.39 a week ago, and $3.26 last month.
Government retail data isn’t adjusted for inflation, which ticked up 0.4% from January to February, higher than the previous month’s figure of 0.3%, according to the latest government report. So retailers only eked out a slight increase accounting for inflation.
“February retail sales provide further proof that spending on discretionary goods in 2024 is likely to be soft following several years of strong growth and as consumer health — albeit still relatively strong — is somewhat weighed down by inflation and reduced savings,” said David Silverman, senior director at Fitch Ratings.
The report also reflects an ongoing shift away from goods, and more toward services. The snapshot offers only a partial look at consumer spending and doesn’t include many services, including travel and hotel lodging. But the lone services category — restaurants — registered an uptick.
“Elevated interest rates, an uptick in energy costs, and persistent discomfort with price levels continue to push consumers to make trade-offs with budgeting, with goods categories increasingly overlooked in favor of services spending,” said Kayla Bruun, senior economist at Morning Consult, a data intelligence firm.
Business at department stores fell 0.2%, while clothing and accessory stores posted a 0.5% drop. Furniture and home furnishings stores had a 1.1% decline.
Online sales showed a rare decline of 0.1%. But electronics and appliance stores had a solid 1.5% increase.
Restaurants posted a 0.4% increase.
Household spending is being fueled by a strong jobs market and rising wages. But spending has become choppy in the face of rising credit costs and higher prices.