February U.S. retail sales were actually better than expected with just a 0.1% drop, but the originally reported 0.2% increase for January was downgraded to a 0.4% drop.
Economists with the Wells Fargo Economics Group say the disappointing retail sales news will reverberate with markets for the rest of the week and could send analysts back to the GDP drawing board.
On the positive side, for retail sales and for U.S. consumers, gasoline-station sales plunged 4.4% during February because of lower gasoline prices. Lower gasoline prices were an important reason for February’s total retail-sales slump.
But other important sectors were also weak:
- Electronics and appliance store sales decreased 0.1%
- Department store sales were down 0.4%
- General merchandise store sales, including department stores, were down 0.2%
- Motor vehicle and parts dealers’ sales were down another 0.2% in after the same decline in January
- Furniture and home furniture store sales were down 0.5%
- Miscellaneous store retailers plunged 1.1%
There was strength in:
- Clothing and clothing accessories stores improved 0.9%
- Health and personal care store sales were up a strong 0.7%
- Food services and drinking places sales were up a solid 1.0%
- Sporting goods, hobby, book and music stores sales were up 1.2%
- Health and personal care store sales were up 0.7%
Even with the disappointing revision, Wells Fargo economists continue to believe the U.S. consumer will lead GDP growth during the first quarter of 2016.
At the same time, the decrease in gasoline prices in February is still a net positive for U.S. consumers even if February’s decrease in gasoline prices is expected to be reversed in March. March’s retail sales will likely be strengthened by gas-price recovery.
