Consumer spending data from February have disappointed as the U.S. Commerce Department posted the lowest growth in retail sales seen in the past six months on Wednesday (March 15).
While sales were up a reported 0.4 percent in January and later adjusted to a growth of 0.6 percent — well over Bloomberg’s median analyst forecast of 0.1 percent growth—this past month was a different story.
The Commerce Department reported that consumer purchases rose just 0.1 percent in the second month of 2017, while only four of the 13 major retail categories included in the department’s numbers saw growth during the month of February.
In February, electronics and appliances decreased 2.8 percent from the previous month and a full 6 percent year on year, the most significant decline since December 2011. Chain apparel sales dropped 0.5 percent, while general merchandise stores saw a 0.2 percent decline.
As with January, the number of internet-based purchases (i.e., from nonstore retailers) rose considerably, up 1.2 percent over January and up a full 13 percent over February 2016.
The Commerce Department’s report additionally indicated that, excluding sales from automobiles and service stations, consumer spending increased 0.2 percent in February.
Eugenio Aleman, senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina, told Bloomberg that one of the reasons February sales growth was relatively weak was due to the delay of tax refunds. Despite the slowed growth, Aleman went on to say that “confidence numbers are through the roof, and if employment continues to grow, it’s only going to strengthen the consumer.”
At the beginning of February, the Internal Revenue Service (IRS) announced that a hardware failure meant that filers who sent their forms in electronically would not be able to have those forms processed, meaning that rebates were going be delayed.
At the time, the IRS said that disruptions would not be significant, saying, “We continue to expect that nine out of 10 taxpayers will continue to get their refunds within 21 days.”
The refund delay likely only accounted for a small part of the consumer spending slowdown. Research from the National Retail Federation and Prosper Insights & Analytics indicates that most taxpayers put their refunds toward their savings (48 percent) or to pay down debts (35.5 percent).