Categories Markets

Feb retail sales dip as consumers cut spending amid slowing economy

In an indication that the US economy is slowing, retail sales declined in February as households reduced their spending on key commodities. Statistics published by the Commerce Department Monday showed spending on electronics, apparels, building materials, and grocery, among others, declined significantly last month.

Considering the fact that consumer spending accounts for about two-thirds of the overall economic activity, even the slightest drop in retail sales can have a noticeable impact. The negative effect of the partial government shutdown seems to have lingered last month though it ended towards the end of January. Reports say that adverse weather conditions, such as the snowstorm, prompted households to postpone their purchases.

Consumers’ willingness to spend has been dampened mainly by the slump in the global economy. In the previous periods, there was an uptick in spending due to increased government spending and benefits from the income tax reform implemented in 2017, the effect of which has been diminishing due to the delay on the part of the authorities to process tax refunds.

Since consumer spending accounts for about two-thirds of the economic activity, even the slightest dip in retails sales can have an impact

Reflecting the negative consumer sentiment, the benchmark retail sales index slipped 0.2% sequentially in February, after registering a 0.7% growth in January. Economists had forecast an increase for the last month. Year-on-year, sales increased by 2.2% in February, indicating a trend that is broadly in line with inflation.

Leading February’s downturn, building materials sales slipped 4.4%, followed by electronics and groceries which witnessed declines of 1% each. Meanwhile, the automotive sector emerged a surprise gainer, recovering modestly from the previous month’s contraction.

Also see: Growing private jobs lift the dollar

The weakness in economic activity could translate into another slowdown in GDP growth in the first quarter. During the October-December period, the economy expanded at a slower rate of 2.2% than the 3.4% growth recorded in the third quarter. Also, the recent hike in interest rates and the ongoing US-China trade war continue to pose challenges to the economy.


We’re on Apple News! Follow us to receive the latest stock market, earnings and financial news at your fingertips

Most Popular

Infographic: Nvidia (NVDA) Q4 revenue up 61%; earnings beat

Nvidia Corporation (NASDAQ: NVDA) Wednesday said its fourth-quarter revenues and profit increased in double-digits amid elevated demand. The results also topped the Street view, driving the stock higher during the

Nutanix (NTNX) Earnings: 2Q21 Key Numbers

Nutanix (NASDAQ: NTNX) reported second quarter 2021 earnings results today. Total revenue remained flat at $346.4 million compared to the same period a year ago. GAAP net loss was $287.3

Macy’s (M) expects digital channels to generate approx. $10 billion in sales by 2023

Shares of Macy’s Inc. (NYSE: M) were down 2.7% in morning trade on Wednesday. The stock has gained 37% since the beginning of the year. A day ago, the retailer


Add Comment
Viewing Highlight