When the holiday shopping season failed to give retailers the sales figures they so desperately needed, much of the industry fixed its hopes on the new year instead. Now that two months of numbers are in, it might be time to pick a new wagon to hitch retail’s hopes to.
The U.S. Census Bureau announced retail sales numbers for February on Tuesday (March 15), and the picture isn’t a pretty one. Retail and food services accounted for $447.3 billion in sales for a 0.1 percent month-to-month decrease. While that drop might not be world-ending, it is a bigger blow than it seems; the 0.1 percent loss is based off of January’s numbers, which were revised from the originally reported 0.2 percent gain to the new figure of a 0.4 percent downturn.
Matt Verbin, chief financial officer at Tanga, told The Wall Street Journal that, even though gas prices have remained low for several weeks, that and other traditional sales-spurring actions haven’t treated merchants as well as they’d hoped.
“We haven’t seen much of a bump from gas prices,” Verbin said. “We’re seeing consumers are saving more than they would have in prior years. There’s a lot of uncertainty.”
In an interview with Reuters, MUFG Union Bank Chief Economist Chris Rupkey explained that the numbers are unlikely to sway the Federal Reserve from its stance of keeping interest rates at their current levels.
“The economy’s engines are not going into reverse … but, at the moment, it is hard to see GDP with a 2 percent handle,” Rupkey told Reuters. “Based on today’s lackluster sales report, policymakers will be in no hurry to raise interest rates.”
Retailers, on the other hand, might find themselves in quite the rush to rid themselves of excess inventory — not since May 2009 has the average inventory-to-sales ratio been as high as it was in February.