Retail sales and food-services spending fell 0.2 percent in February following a 0.7 percent gain in January. Excluding the volatile auto and energy categories, core retail sales and food services were down 0.6 percent in February after a gain of 1.7 percent in January. Over the past year, total retail sales and food services were up 2.2 percent through February, while core retail sales and food services have increased 2.9 percent. Gains in the 2 to 3 percent range were typical in 2015 and 2016 but are well below the 4 to 6 percent range from mid-2017 to 2018 (see chart). Retail sales posted drops between 5 and 10 percent during the last recession.
Results for February were mixed among the 13 categories of spending, with declines in 7 and gains in 6. Declines were led by a 4.4 percent drop at building-material, garden-equipment, and supplies dealers while miscellaneous store retailers fell 1.6 percent, electronics and appliance stores lost 1.3 percent, and food and beverage stores dropped 1.2 percent.
On the positive side, nonstore retailers rose 0.9 percent, motor vehicle spending increased 0.7 percent, and health and personal-care stores gained 0.6 percent. Gasoline stations posted a 1.0 percent jump, but gasoline spending tends to reflect changes in prices more than changes in real supply and demand. The average retail price for gasoline rose 2.6 percent in February.
The February drop in retail sales is the second decline in the past three months and suggests that first-quarter GDP growth may be weak. The report also continues a string of decidedly mixed economic reports and adds to concern about the durability of the current economic expansion. While growth appears to be weak, continued expansion remains the most likely path, though a heightened degree of caution is warranted.
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