Retail sales rose 0.6% in February ,the Commerce Department's Census Bureau said on March 14.
Michael Pearce, Deputy Chief US Economist at Oxford Economics provided the following analysis:
The modest rebound in retail sales in February suggests that consumer spending growth slowed in early 2024. Accounting for inflation, we think real consumption growth was flat in February, leaving it on track for growth of 2% annualized in Q1, weaker than our baseline forecast for a 2.4% increase and the 3% rise in Q4.
The 0.6% increase in sales was helped by a price-related increase in gas station sales and a rebound in building material and auto sales, which had been depressed in January by severe weather. Control group sales, which strip out gas, autos, building materials and food services, were unchanged. Driving the weakness were furniture and clothing sales, as well as a rare decline in online sales. The past few months' data were revised slightly lower on net.
Food services spending continued to rise at a solid pace, and other indicators suggest the services sector is driving much of the gain in consumption growth in February. We calculate that personal spending rose by 0.4% in February, though with the PCE deflator also on track for a 0.4% increase, that would leave spending flat in real terms. The strong end to last year means consumption growth is still on track for a 2% annualized increase in Q1 overall.
We expect consumption growth to remain close to that pace over the rest of the year as solid labor market conditions keep real disposable income growth strong, and the resilience of households' balance sheets means the saving rate rises only modestly.
