US retail sales fell 3% in February

“The February data is in the context of the January increase in consumer spending on goods,” said Ryan Wang, American economist at HSBC. “In a sense, even a modest decline would still cause consumer spending, especially on goods, to increase substantially since the turn of the year.”

Retail sales have increased 6% in the last three months compared to the same period last year, according to the Department of Commerce.

February sales fell sharply as consumers spent less on automobiles, furniture, electronics, home improvement, health and clothing. Sales at food and beverage stores remained stable, while sales at gas stations increased sharply, 3.6%, as gas prices accelerated this year.

February is typically a quiet month for retail sales, as stores are gearing up for the spring sales season, including Easter. The harsh winter in February also wreaked havoc in an area of ​​the U.S., which may also have affected sales last month, said Scott Brown, chief economist at Raymond James Financial.

Richard Woolley, owner of Weathered Vineyards in New Tripoli, Pennsylvania, said February was a slow month for sales, with the winery’s revenue over Valentine’s Day weekend dropping 50% compared to last year.

Woolley said the company currently relies on sidewalk collections and outdoor service, due to state coronavirus determinations that restrict its ability to perform wine tastings indoors. Cold weather in the past month has reduced the number of customers willing to sit outside, he said.

Woolley said he was optimistic about the prospects for business as the warmer months approach and federal stimulus efforts permeate the economy.

“You cannot inject trillions of dollars into the United States economy and not have a share of them coming here,” he said. “People are going to spend. We will see some feedback on this at some point and it will probably lead to an OK 2021. ”

Economists expect an increase in retail spending in the coming months, as additional government stimulus is distributed from the $ 1.9 trillion plan signed last week and Covid-19 vaccinations lead to a corresponding decline in cases and increases in employment levels as companies open up more fully.

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

Meanwhile, new cases of coronavirus reported in the United States have been hovering close to their lowest levels since the beginning of October and President Biden has instructed states to make all American adults eligible to apply for a vaccine by May 1.

These factors combined can help boost consumer spending in the coming months on services, such as in the leisure and hospitality sector, where consumer spending and job gains are behind.

“The end result is all about the pandemic. Once the pandemic is over, you are likely to see a big recovery in consumer services, ”said Brown, of Raymond James. “People tend to go crazy, we think, in terms of wanting to go out and do things.”

In general, American families are sitting with potentially mature money to spend, as savings have increased during the pandemic. The research suggests that Americans have spent previous rounds of direct cash payments on bills, food and other goods and to pay off debts, while concealing part of the funds.

The fiscal stimulus “is definitely adding purchasing power to families,” 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 signaled an optimistic outlook on the economy. A University of Michigan consumer sentiment index rose in early March to its highest level in a year, as people expressed optimism about coronavirus vaccines and federal aid initiatives.

Other signs of accelerating the economic recovery have emerged. After cutting workers in late 2020, U.S. employers created 379,000 jobs in February, and the unemployment rate fell to 6.2%. The US manufacturing industry has shown steady signs of expansion.

Meanwhile, states and municipalities continued to loosen restrictions on business and activities as cases eased. Still, public health officials have warned of a potential resurgence of infections amid fatigue among Americans with precautions such as wearing a mask and social detachment.

“Consumers have the ability to spend, the willingness to spend, but on the other hand, it will squirm if the virus spreads again or if the variants impair our ability to contain it,” said Kleinhenz.

Tom Scheiman, owner of ba Sweetie Candy Co. in Cleveland, said pedestrian traffic and business at his candy store had increased in recent months. The company has a 40,000 square foot facility that is open to the public and sells sweets, vintage soft drinks and ice cream.

The company is also a wholesale candy distributor for local supermarkets and convenience stores. Scheiman said that part of the business is also on the rise.

“You can tell by the way people are buying and the way they are buying, there is no reluctance,” he said. Customers “have more money in their pockets,” he said, adding that the size of his customers’ average purchase has also increased.

The pandemic forced the retail store to close for 10 weeks around Easter last year, causing a loss of about $ 2 million in sales. This year, things look different.

“We turned a corner substantially,” said Scheiman.

For his part, he said he added three full-time employees to his staff and increased his employees’ salaries by an average of 12% since the beginning of the year.

Write to Amara Omeokwe at [email protected]