Retail sales up slightly in February, despite nationwide snowstorms
Saturday, March 13, 2010
February's cross-country snowstorms couldn't freeze out consumers as retail sales rose 0.3 percent for the month, according to government data released Friday.
The increase was higher than many analysts had expected considering that almost every state had snow on the ground at one time last month. An analysis of February foot traffic at shopping centers by research firm ShopperTrak found that attendance slipped during the snowstorms but picked up significantly immediately afterward. The month's solid results bolstered some economists' view that consumer spending has regained its footing.
"Maybe they've loosened the belt a notch or two," said Stuart Hoffman, chief economist for PNC Financial Services Group. "I think we have seen a turn."
The gain came despite the wide-ranging vehicle recalls by Toyota that dampened consumers' appetite for autos. Motor-vehicle sales dropped 2.4 percent in February compared with the previous month. Health and personal care stores also saw a sales dip: 0.7 percent.
Those declines were more than offset by strong gains in more discretionary categories. Sales at electronics stores jumped 3.7 percent in February, driven in part by the Super Bowl and the Olympics. Even building-materials stores, which have been among the hardest-hit during the recession, enjoyed a 0.5 percent increase.
According to the National Retail Federation, retail sales excluding autos, gasoline and restaurants rose 1 percent in February from the previous month.
"February could be the direct result of cabin fever with consumers eager to get some fresh air and enjoy a day of shopping," said Rosalind Wells, chief economist for the National Retail Federation, a trade group.
But not all signs point toward a thawing of consumer spending. Economists cautioned that high unemployment rates will continue to dampen demand. Preliminary results from the Reuters/University of Michigan survey shows consumer sentiment declined from 73.6 in February to 72.5 in March. The index has risen significantly from a year ago but has stalled lately along with the job market.
Hoffman said consumer sentiment is more fickle than actual behavior and frequently diverges from monthly spending figures even though the two broadly track each other. But Paul Dales, U.S. economist for Capital Economics, said he thinks falling sentiment foreshadows weaker spending ahead. The lower figures may indicate that the broader economic recovery has yet to hit many consumers' pocketbooks, keeping them cautious about the future.
"Usually, where confidence goes, spending tends to follow," Dales said.