Retail Sales Fizzle in February

One young supermarket employee sorting products on the shelfs
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U.S. retail sales fell more than expected in February as winter weather and the fading effect of second-round stimulus checks pushed shoppers to take a deep breath after a frenzied January.

Monthly retail and food service sales fell 3% from January, dipping to $561.7 billion, according to seasonally adjusted data released by the U.S. Census Bureau Tuesday. It was the largest one-month drop since April of last year and a steeper decline than economists had expected, though that’s partly because figures for an already strong January were revised even higher. Econoday said the consensus was for a 0.5% decline, and Moody’s Analytics forecast a decline of 1.8%.

Most sectors saw declines in February, including department stores (8.4%), sporting goods and hobby stores (7.5%), and nonstore retailers (5.4%). Gasoline stations posted a 3.6% increase on the back of rising gas prices, while grocery store sales had a very slight 0.1% uptick.

February will likely be an outlier, economists said after the report, citing the relatively hard comparison with January, a new round of stimulus checks coming to bank accounts now, and fewer restrictions on shopping and activity in general. January’s 7.6% increase was powered by the last influx of government relief, and they expect the new $1,400 checks to energize spending once again for March.

Last month was a “road bump on the speedway,” Sal Guatieri, senior economist at BMO Capital Markets, wrote in a commentary.

Even with the declines, February sales were still higher than in December, so January gains weren’t completely reversed. Compared with February 2020, sales were up 6.3%. 

The double-dose of stimulus money has Wall Street increasingly optimistic about the economy’s prospects in 2021, with many forecasters adjusting their estimates for growth in recent weeks.

Article Sources

  1. Econoday. "Retail Sales." Accessed March 16, 2021.

  2. Moody's Analytics. "Retail Sales." Accessed March 16, 2021.

  3. U.S. Census Bureau. "Advance Monthly Sales for Retail and Food Services, February 2021." Accessed March 16, 2021.

  4. BMO Economics. "U.S. Retail Sales (Feb.) — Road Bump On The Speedway." Accessed March 16, 2021.