Retail sales dropped 0.7 percent in February from January, but were up 2.7 percent compared to last year's figures and are on track to ride strong fundamentals of job and wage growth in the coming months, the National Retail Federation (NRF) said today.
Precise comparisons of sales statistics are difficult to make because of delays and revisions of economic data related to the federal government shutdown in December and January, the group said.
As of February, the three-month moving average was up 2.2 percent over the same period a year ago, according to the NRF. February's results build on improvement seen in January, which was up 1.9 percent monthly and 4.8 percent year-over-year, according to revised data released today. January had originally been reported as a 1.3 percent increase over December and up 3.6 percent year-over-year.
The NRF says its numbers are based on data from the U.S. Census Bureau, which reported today that overall February sales - including auto dealers, gas stations and restaurants - were down 0.2 percent seasonally adjusted from January but up 2.2 percent unadjusted year-over-year. The release of retail sales data for December, January and February has been delayed as the Bureau works through a backlog caused by the government shutdown earlier this year, the NRF said.
Another effect of the shutdown is that the Internal Revenue Service (IRS) has been slow in issuing refund checks, which traditionally help drive spending in the early months of each year, the NRF said. Despite those impacts, the NRF is forecasting that retail sales during 2019 will increase between 3.8 percent and 4.4 percent to more than $3.8 trillion.
"The weaker-than-expected February retail sales numbers reflect colder weather and increased precipitation that kept shoppers home but were also skewed downward because of the government's upward revision in January's results," NRF Chief Economist Jack Kleinhenz said in a release. "The after-effects of the erratic stock market, the government shutdown, and slower tax refunds this year also likely played a role. It is important to look beyond the February figures and focus on the very significant revision to January retail sales, which shows that the consumer has not forsaken the economy as some previously claimed."
Instead, Kleinhenz said the NRF expects growth to pick up, fueled by strong fundamentals like job and wage growth that are driving increased consumer spending for the U.S. economy in the months ahead.