Retail sales fell 0.1% in February
Washington – U.S. consumers spent less at auto dealers, gas stations and department stores in February, causing overall retail sales to slip 0.1 percent despite signs elsewhere of a robust economy and the tax cuts signed into law by President Donald Trump starting to take effect.
It was the third consecutive month of declining retail sales, the Commerce Department said Wednesday, though they’re still 4 percent higher from a year ago. Shoppers have opened 2018 with a cold spell after robust spending gains in the months leading up to the holidays. The core retail sales that economists monitor – which exclude autos, building materials, gasoline and restaurants – improved a mere 0.1 percent in February after essentially being flat in January.
So far, the promise of higher take-home pay from Trump’s tax cuts appears to have had little influence on spending for big ticket items such as autos. But many economists expect to see gathering momentum for consumer spending given that the unemployment rate is at a low 4.1 percent and the benefits from the tax cuts start to filter through the broader economy.
“This lull is temporary,” said Gus Faucher, chief economist at PNC Financial Services.
Michael Dolega, a senior economist at TD Bank, said he anticipates stronger retail sales in March. He noted that much of the decline was at auto dealers, which had been booking sales growth as people replaced vehicles damaged last year by hurricanes Harvey and Irma. He also noted that federal income tax filing season for 2017 had a relatively late start, so people may be spending any refunds later in the year.
Still, there may be limits to how much retail sales can rise. Consumers have continued migrating to online outlets such as Amazon and away from traditional department stores, dampening overall sales as the competition to charge the lowest price has increased. Retail sales are increasingly influenced by the aging of the baby boomer generation, who tend to spend less after retirement.
Auto sales fell 0.9 percent last month, while purchases at gas stations tumbled 1.2 percent. Sales at department stores declined 0.9 percent.
But spending at online and catalog retailers climbed, as did spending at building materials stores, restaurants and clothiers to offset much of the decline elsewhere.
Retailers remain optimistic about a sales rebound. They added a healthy 50,300 jobs in February, according to the Labor Department’s jobs report.
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