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.