US retail sales fell 3% in February

“The February data are in the context of the increase in consumer spending on goods in January,” said Ryan Wang, US economist at HSBC. “In a sense, even a modest decline will continue to significantly increase consumer spending, especially on goods, since the turn of the year.”

According to the Department of Commerce, retail sales have risen 6% over the past three months compared to the same period a year ago.

Sales in February generally fell as consumers spent less on cars, furniture, electronics, home improvement, healthcare and clothing. Sales at food and beverage stores remained unchanged, while sales at filling stations rose 3.6% sharply as gas prices accelerated this year.

February is usually a quiet month for retail sales, as stores prepare for the spring sales season, including Easter. Severe winter weather in February also wreaked havoc in the US, which could also weigh in on sales last month, said Scott Brown, chief economist at Raymond James Financial.

Richard Woolley, owner of Weathered Vineyards in New Tripoli, Pa., Said February was a slow month for sales, with winery revenues falling 50% lower on Valentine’s Day weekend compared to last year.

Mr. Woolley said the company currently relies on pickups and outdoor services due to the mandate of the coronavirus that limits the ability to hold wine tastings indoors. The cold weather last month dampened the number of customers willing to sit outside, he said.

Mr. Woolley said he was optimistic about the outlook for business as the warmer months approached and federal stimulus efforts penetrated the economy.

“You can not pump billions of dollars into the US economy and not land on it,” he said. “People will spend it. We will see feedback on this at some point and it will probably lead to an OK 2021. ‘

Economists expect a boost in retail spending in the coming months as additional government stimulus is spread from the $ 1.9 billion plan signed last week and Covid-19 vaccinations lead to a corresponding decline in cases and an increase in employment levels as businesses open more fully.

As part of the federal government’s recent emergency relief package, many Americans will receive direct cash payments of $ 1,400. The package also extended enhanced unemployment benefits and extended the child tax credit.

Meanwhile, new reported cases of coronavirus in the U.S. are moving near the lowest levels since early October, and President Biden has instructed that all U.S. adults be eligible to receive a vaccine by May 1st.

Together, these factors can help spur consumer spending on services, such as in the leisure and hospitality sector, in the coming months, where consumer spending and job losses have lagged behind.

“The core is about the pandemic. “Once the pandemic is over, you will probably see a major setback in consumer services,” he said. Brown, of Raymond James, said. “We think people are likely to get depressed if they want to get out and do things.”

U.S. households generally sit on cash that may be ripe for spending, as it has increased savings during the pandemic. Research has suggested that Americans spent the previous round direct cash payments on bills, food and other goods and to pay off debt, while also hiding some of the funds.

Fiscal stimulus ‘definitely adds purchasing power to households’, said Jack Kleinhenz, chief economist at the National Retail Federation. “The question is how much will actually be spent in the coming months,” he said.

Consumers also indicated a brightening outlook for the economy. An index of consumer sentiment from the University of Michigan rose to its highest level in a year in early March as people expressed optimism about coronavirus vaccinations and federal aid initiatives.

Other signs of an increase in the economic recovery have emerged. After the workers were cut at the end of 2020, U.S. employers added 379,000 jobs in February, and the unemployment rate rose to 6.2%. The U.S. manufacturing industry has shown steady signs of expansion.

States and municipalities, meanwhile, have continued to ease restrictions on businesses and activities as things have eased. Public health officials nevertheless warned of the possible resurgence of infections amid fatigue among Americans with precautions such as wearing a mask and social distance.

“Consumers have the ability to spend, and willingness to spend, but on the downside, it will be distorted if the virus picks up again, or if variants have a rapid bump in our ability to limit it,” Kleinhenz said.

Tom Scheiman, owner of ba Sweetie Candy Co. in Cleveland, said foot traffic and business in his candy store have increased over the past few months. The company has a 40,000-square-foot facility that is open to the public and it sells candy, old-fashioned soft drinks and ice cream.

The company is also a wholesaler of confectionery in local grocery and convenience stores. Mr. Scheiman said part of the business was also booming.

“You can see how people shop and how they shop, there is no hesitation,” he said. Shoppers “have more money in their pockets,” he said, adding that the size of his customers’ average purchases has also increased.

The pandemic caused the retail store to close for ten weeks last Easter last year, causing a loss of about $ 2 million in sales. This year, things look different.

“We have made a significant turnaround,” he said. Scheiman said.

In turn, he said he had added three full-time employees to his staff and increased wages for his workers by an average of 12% since the beginning of the year.

Write to Amara Omeokwe at [email protected]