Feb Retail Sales Drop As Consumers Curb Spending

Retail sales fell in February, as consumers curbed their spending and the stimulus from the tax cuts began to disappear.

According to the Commerce Department’s monthly retail sales report, retail and food services sales for February declined 0.2 percent from January but were 2.2 percent higher than a year ago. Non-store retailers were up 10 percent on a year-over-year basis and health and personal care store sales were up 5.9 percent compared to last year.

Sales figures for February were lower than what economists polled by Reuters were expecting. The news outlet reported economists forecast retail sales to increase 0.3 percent in February. Consumers may have reigned in spending because there has been a delay in processing taxes due to the recent partial government shutdown. That shutdown lasted more than a month and the government is still catching up. Tax refunds are also down due to changes in the tax code. Reuters noted that the weather may have also hurt retail sales.

The retail sales decline is just the latest signal that the economy could be slowing down. In the fourth quarter, the economy grew 2.2 percent. That comes on the heels of a 3.4 percent increase in the economy in the third quarter. It is also below the 2.6 percent increase initially reported. For all of last year, growth was 2.9 percent. Economists expect growth to be just 2.4 percent in 2019.

Hurting growth is the trade war with China, the dwindling benefits from the tax cuts and the Brexit situation. All that uncertainty is prompting businesses and consumers to reign in spending.

The news report noted that sales for building materials, garden equipment and supplies saw a 4.4 percent decline in February, marking the largest decline since April of 2012. Meanwhile, sales at clothing stores declined 0.4 percent while furniture sales were down 0.5 percent in February. Food and beverage sales were also down, falling 1.2 percent. According to the report, that is the largest decline for the sector in 10 years.