Feb. retail sales post biggest drop since 2018

WASHINGTON — Retail sales fell 0.5% in February, the largest drop in more than a year, indicating that the consumer sector was slowing even before the coronavirus struck with force in the United States. Economists said they were looking for even weaker numbers in coming months.

The Commerce Department reported Tuesday that the February drop in sales was the biggest since a 2% decline in December 2018. Sales had been up 0.6% in January.

The February decline came from weakness in a number of areas including a 0.9% fall in auto sales and a 2.8% drop at gasoline stations, a decline that reflected falling gas prices.

Excluding motor vehicles and retail sales were still down 0.4%.

In a likely sign of things to come, online sales showed a solid gain of 0.7% in February. Economists are forecasting even bigger demand in this area as Americans heed warnings to limit activities outside the home to try to halt the spread of the virus.

“With virus fears escalating drastically, containment measures being stepped up and high-frequency data showing that consumers are already avoiding public places like restaurants and cinemas nationwide, it looks likely that retail sales will fall sharply in March,” said Andrew Hunter, senior U.S. economist at Capital Economics.

The retail sales report doesn’t cover the

parts, past week when the U.S. economy shuddered to a near-halt, the Dow Jones plummeted and iconic chains like Nordstrom and Abercrombie & Fitch announced that they are temporarily closing to curb the spread of coronavirus.

While discounters and grocers like Walmart, Target and Costco have seen long lines of customers wanting to stockpile groceries, many mall-based clothing stores, which were already struggling, are facing a drop-off in customer traffic. Discounters’ biggest problem now is trying to keep up with the demand from shoppers’ panic buying.

Economists believe that the hit to consumer spending, which accounts for 70% of economic activity, will be enough to push the country into a recession.