In February the economy showed a mixed bag. "The February retail sales report painted a cautious picture of consumer spending following the cold-weather plunge in January,” says Nationwide Chief Economist Kathy Bostjancic of this morning’s February retail sales report, in a statement
“Given that spending on services accounts for about two-thirds of all real consumer spending, we now see real consumer spending on pace to rise just 1.4% this quarter (following the 4.2% surge in Q4) and real GDP growth looks to be running at an anemic 0.5% annualized rate,” added Bostjancic.
Bostjancic provided the following analysis:
A softening in consumer spending this quarter was to be expected following consumers rush to purchase goods last quarter ahead of looming tariffs, but the sharp deterioration in consumer confidence levels related to the tariffs and decline in the stock market is also weighing on spending activity.
In the details, headline retail sales rose just 0.2% in February following the 1.2% dive in January, though the headline was held back by a price-related decline in gasoline prices – both nominal gasoline sales and gasoline CPI was down 1.0% on the month. And while motor vehicle and parts sales in the report were down 0.4%, it’s the 2.5% rise in unit auto sales that feed into real consumer spending and GDP.
The retail control group rebounded 1%, reversing the 1% decline in January. The lone service category, food and drinking places sales were down a sharp 1.5% suggesting consumers are pulling back on discretionary spending amid concerns over tariffs, declines in the equity market and slowing economic growth.
