An Amazon Prime truck drives away after a delivery in Washington, DC on February 17, 2022.
Nicholas comb | AFP | Getty Images
Consumer spending continued to be slower than expected in February, according to a report by the Department of Commerce on Wednesday.
Forward retail sales rose 0.3% for the month, slightly below the Dow Jones estimate of 0.4%. Ex-autos sales rose 0.2%, well below expectations for a 0.9% gain and an indication that consumers were slowing down after a fast pace earlier in the year.
Spending figures came in well below the rise in prices, which rose 0.8% in February, according to Labor Department data released last week. Retail spending figures are not adjusted for inflation.
The biggest dip in February’s numbers came in online shopping, with out-of-store sales down 3.7%.
A bright spot in figures released on Wednesday is that January spending was revised to a 4.9% increase, a blistering pace that was even stronger than the original estimate of 3.8%.
The two-month number “suggests that real consumption growth remains reasonably solid,” albeit headwinds are beginning to emerge, particularly from expected Federal Reserve rate hikes, said Andrew Hunter, chief US economist at Capital Economics.
“With real disposable incomes already declining since mid-2021 as previous fiscal support was withdrawn and broader inflation taking its toll, real consumption growth is still likely to decelerate in the coming months, particularly when it comes to personal savings The rate is already below pre-pandemic levels,” Hunter wrote. “It also may not be long before Fed tightening starts hitting spending on high-priced durable goods.”
However, consumers remain cashless, ending 2021 with $1.4 trillion in savings, even as the personal savings rate, most recently at 6.4%, has fallen steadily during the pandemic era.
Demand for goods versus services has been exceptional, and demand has struggled to keep up. This has fueled inflation at a rate of 7.9% on a 12-month basis, the fastest pace in more than 40 years.
Year-over-year, retail spending rose 17.6%, the Commerce Department said.
The meteoric rise in gas prices has given that number a sharp boost, with sales at service stations up 5.3% in February and up 36.4% year-on-year. According to the Energy Information Administration, prices at the pump rose about 7% in February alone.
Bar and restaurant sales also showed strong gains for the month, up 2.5% and up 33% year over year. Health and personal care stores were down 1.8%, while furniture stores were down 1% and auto and parts dealers were up 0.8%.
https://www.cnbc.com/2022/03/16/retail-sales-february-2022-.html Retail sales in February 2022 remain short as inflation weighs on consumer spending