Retail sales fell in February after a jump in the previous month, the Commerce Department said Tuesday, highlighting the impact of stimulus money on consumer spending, which is likely to continue in fits and starts as the economy recovers.
Sales in February fell 3 percent, government data showed. The decline was stronger than some economists expected, but sales for the month were still higher than a year earlier when the pandemic began to squeeze the economy.
The fall in February was due to sales up 7.6 percent in January – a gain likely due to stimulus checks deposited late last year. The January surge, which was revised up on Tuesday, benefited a variety of retailers. Consumers spent more on goods, including at furniture sellers, department stores and restaurants. This is a positive sign of a pandemic-ravaged economy.
The data suggests that the recovery in consumer spending is likely to be bumpy as the retail sector recovers from shifts in consumer spending and a new round of stimulus payments hits Americans’ bank accounts. Retailers saw largely uneven sales for much of the past year as consumers flocked to large boxes and grocery stores and spent less at many clothing stores and restaurants. Balancing these categories will likely require a combination of stimulus funds, vaccinations, unemployment improvements, and warm weather.
“It would obviously slow down a bit,” said Mickey Chadha, retail analyst at Moody’s Investors Service, of the February sales.
“Going forward, the new economic reviews that are currently being conducted will definitely have a positive impact on retail sales in March and through April,” he added. “All indications are that once vaccines roll out across the country and the pandemic under control, that spending capacity will only boost retail sales.”
Morgan Stanley economists had forecast a 0.7 percent increase in February sales, based on the oversized gains in January, and also forecast that new stimulus packages arriving in late March and early April will spur spending in the months ahead would.
President Biden signed a nearly $ 1.9 trillion relief plan last week, and direct payments of $ 1,400 per person are already being deposited into the bank accounts of low- and middle-income Americans.
“Some of that money has to go into retail – it just has to go,” said Chadha.
The law, known as the American Rescue Plan, extends federal unemployment benefits to $ 300 through September 6, and provides billions of dollars in coronavirus vaccine distribution and relief efforts to schools, states, tribal governments, and small businesses who struggled during the pandemic.
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