US retail sales fell 3% in February

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

Retail sales have risen 6 percent in the past three months from the same period a year ago, according to the Commerce Department.

February sales fell overall as consumers spent less on cars, furniture, electronics, home improvements, healthcare and clothing. Sales at grocery and beverage stores remained unchanged, while sales at gas stations rose sharply by 3.6% 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. The severe winter weather in February also wreaked havoc in an area of ​​the United States, which could 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 winery revenues on the Valentine’s Day weekend down 50% from last year.

Mr Woolley said the business is currently based on on-board pick-ups and outdoor services, due to state mandates for coronaviruses that restrict its ability to hold indoor wine tastings. The cold weather last month diminished the number of customers willing to stay outside, he said.

Mr. Woolley said he was optimistic about the business outlook as the warmer months approach and federal stimulus efforts are entering the economy.

“You can’t pump billions of dollars into the US economy and you won’t be able to land here,” he said. “People will spend it. We will see some feedback from this at some point and that will probably lead to an OK 2021 ”.

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

As part of the latest federal government aid package, many Americans will receive direct cash payments of $ 1,400. The package also extended the increased unemployment benefits and extended the child tax credit.

Meanwhile, new reported cases of coronavirus in the US are nearing their lowest levels since early October, and President Biden has ordered states to make all eligible American adults sign up for a vaccine by May 1.

These combined factors could help boost consumer spending in the coming months for services, such as in the leisure and hospitality sector, where consumer spending and employment gains lagged behind.

“The conclusion is about the pandemic. Once the pandemic is behind us, you may see a great return to consumer services, ”said Mr Brown of Raymond James. “It’s likely that people will go crazy, we think, in terms of the desire to go out there and do things.”

US households are largely with money potentially ripe for spending because they have stimulated savings during the pandemic. Research has suggested that Americans spent previous rounds of direct cash payments on bills, food and other goods and to pay off debts, while also hiding some of the funds.

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

Consumers also signaled a better outlook for the economy. An index of consumer sentiment at 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 economic recovery have emerged. After cutting workers at the end of 2020, US employers added 379,000 jobs in February, and the unemployment rate fell to 6.2%. The US manufacturing industry has shown constant signs of expansion.

Meanwhile, states and municipalities continued to ease restrictions on business and activity as cases eased. However, public health officials have warned of a potential recurrence of fatigue-induced infections among Americans, with precautions such as wearing masks and social distancing.

“Consumers have the ability to spend, the desire to spend, but the downside will be contracted if the virus resumes or variants will jeopardize our ability to contain it,” Mr Kleinhenz said.

Tom Scheiman, owner of Sweetie Candy Co. in Cleveland, said pedestrian traffic and his candy store business have grown in recent months. The company has a 40,000-square-meter facility that is open to the public and sells candy, old-fashioned soft drinks and ice cream.

The company is also a wholesale distributor of candy to local and local grocery stores. Mr Scheiman said part of the business was also growing.

“You can see how people buy and how they buy, there is no reluctance,” he said. Buyers “have more money in their pockets,” he said, adding that the average purchase size of his customers has also increased.

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

“We have made a substantial corner,” said Mr Scheiman.

In turn, he said he 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]