- Retail sales fell unexpectedly in February.
- Consumer spending accounts for more than two-thirds of economic activity.
- The results underscore expectations for slower economic growth in the coming months.
Retail sales slipped in February as receipts fell in more than half of major categories, an unexpected pullback underscoring expectations for slowing growth in the largest economy.
The Commerce Department said Monday that retail sales slipped 0.2% in February, compared with economist expectations for a 0.3% increase. Data for January was revised to show a 0.7% increase, up from the 0.2% previously reported.
All eyes have been on gauges of consumer activity in recent months, as the effects of stimulus measures fade and other major economies sputter. In December, retail sales in the US fell by the most in a decade.
“Stepping back from the monthly noise, it’s very clear that the rate of growth of retail sales has stepped down since last fall, but that was inevitable as the impact of the tax cuts and the drop in gas prices faded,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
In February, consumers spent less on a wide range of products, including clothing, furniture, and electronics. Falling by the most since April 2012, building materials and garden supplies were down 4.4%. Core retail sales – which exclude volatile categories like cars, gasoline and food – fell 0.4%.
Consumer spending accounts for more than two-thirds of activity in the US economy, which is expected to slow this year. Economists expect gross domestic product, a measure of how much the country produces in goods and services, to rise between 1% and 2% in the first quarter.
“The key question now is whether it makes sense to extrapolate this slowdown, which likely will be reflected in zero growth in real consumption in Q1, into a sustained drag on economic growth,” Shepherdson said. “We think not.”
The report had been delayed by the partial government shutdown that ended January 25, which after five weeks was the longest on record.
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