Retailers could have reason to be concerned about the health of the U.S. economy, as retail sales slipped 0.2 percent in February to $506 billion, marking an unexpected decline in consumer spending.
While January’s recovery was revised upward from 0.2 percent to 0.7 percent month-over-month growth, economists had expected sales to continue to trend upward by 0.3 percent in February, so the downturn is a disappointment. Sales in clothing and accessory stores in particular slumped 0.4 percent during the month and 0.5 percent over February 2018. Sporting goods stores, meanwhile, were up 0.5 percent month over month but down 8.2 percent over the prior year.
Department stores, which saw falling sales in January despite the overall upward momentum, again saw sales shrink to $12.03 billion as several chains, including Sears and J.C. Penney, continued to shutter stores in the pursuit of profitability.
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The National Retail Federation blamed inclement weather and political uncertainty for some of the declines. “The weaker-than-expected February retail sales numbers reflect colder weather and increased precipitation that kept shoppers home but were also skewed downward because of the government’s upward revision in January’s results,” said NRF chief economist Jack Kleinhenz. “The aftereffects of the erratic stock market, the government shutdown and slower tax refunds this year also likely played a role.”
As consumers finally get their paychecks in the mail from the IRS, spending could tick up, and the significant upward revision to January’s results is a reminder that the current figures are preliminary.
“We still expect growth to pick up, fueled by strong fundamentals like job and wage growth that are driving increased consumer spending,” said Kleinhenz. “The consumer will continue to provide direction and strength to the U.S. economy in the months ahead.”
February’s sales were up 2.2 percent year over year.
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