Retail sales, for the second straight month, failed to meet expectations as higher prices continue to put pressure on consumers, according to the latest data from the Census Bureau.
- Advance estimates of U.S. retail and food services sales rose to a seasonally adjusted $722.7 billion, up 0.2% from the previous month and the second lowest month in the last six months.
- Retail sales were still up 3.1% from the same time last year. However, this was down significantly from 4.2% in January and is the lowest level in the last four months.
Swing & A Miss: Economists were expecting a much bigger 0.6% rise from January and they expected retail sales to slow to 3.5% in February.
Breaking It Down: Higher food prices gave consumers some pause on visiting restaurants with sales down 1.5% from January. Department stores saw the biggest decline with sales down 1.7% and gas stations also saw a big drop with sales down 1.0% thanks to lower fuel prices.
- On the flip, online retailers saw a big 2.4% increase from January and healthcare stores were up 1.7%
Flat Sales: Retail sales were flat when adjusted for inflation as the CPI showed prices rising 0.2% in February as well. However, sales are still up year-over-year as sales are up 3.1% compared to price increase of 2.8%
Revisions: It turns out January was worse than originally thought as sales were revisioned downward to -1.2% versus the 0.9% decline originally reported.
What they’re Saying: Renaissance Macro Research tweeted, “Consumers have been cutting back on their discretionary purchases. Over the last three months, restaurant sales have collapsed 8.5% at an annual rate. The consensus miss on retail sales was an online shopping story this month as it was last month. Outside of that, conditions weak.”
- On the flip side, Callie Cox of Ritholtz Wealth tweeted “Look, I’m not into giving this administration grace, but this isn’t the weak number ppl are making it out to be. Control group sales fell in January (prolly weather), then rebounded in February to pretty much make up for the Jan drop. That’s all.”
Bottom Line: Higher prices continue to be a problem for consumers. The fear of possible higher prices with a trade war is undoubtedly making consumers even more skittish.
