February retail sales did little to calm investor’s fears of a consumer slowdown. Sales grew 0.2% for the month but came in well shy of expectations. And the prior month was revised lower by -0.3%. So the combined total was a net -0.1%.
Here are the details:
February retail sales: $722.7 billion (+0.2% vs. +0.6% expected)
January was revised lower (from -0.9% to -1.2%)
Retail sales are 3.1% higher than last year (but down from 3.9% growth)
Core retail sales (excluding autos) came in line with expectations: (+0.3%)
Real retail sales (0.0% month and +0.3% y/y)
Only 5 of 13 consumer categories gained in February. Led by e-commerce (+2.4%) and health & personal care (+1.7%).
Food services & drinking places (-1.5%) and gas stations (-1.0%) were the biggest decliners.
This report did little to change the narrative. Consumers have shifted their spending patterns away from goods a while ago. Inflation-adjusted retail sales is still below its April 2021 highs. The only reason why total retail sales had been making record highs (up until this recent slowdown) is because prices have been going up. Demand hasn’t changed.
Until recently, spending on services had grown to the point where it kept the economy growing. If that fails to keep up, then a slowdown is inevitable.