Consumer spending, which accounts for two-thirds of U.S. economic activities, slowed down in the first two months of 2018 after a booming quarter at the end of 2017. The U.S. retail sales in February missed economists’ forecasts by 0.5 percent and came out 0.1 percent lower than January, according to the monthly retail sales report released by the Commerce Department on Wednesday.
It is also the first time since April 2012 that retail sales have declined for the third straight month.
The decline in February was mainly triggered by slowing sales in automobiles (down 0.9 percent), gas (down 1.2 percent) and department stores (down 0.9 percent).
However, there are five categories where spending grew against the trend. Spending in building material and home improvement supplies was up by 1.9 percent; sporting goods, books and music products were up by 2.2 percent; online retailers overall saw 1.0 percent growth; clothing and accessories were up by 0.4 percent; and restaurants and bars were up by 0.2 percent.
While spending growth in some of these categories may be simply due to seasonal factors, such as sporting goods and restaurant spending, others signal bigger changes in consumer spending trends.
“Month-to-month trends are really hard to interpret, because seasonal factors can cause biases. It’s the year-over-year numbers that are more important,” said Jack Kleinhenz, chief economist at the National Retail Federation.
For a longer-term comparison, for the three month period ending February 28, home building supplies, furniture (despite a 0.8 percent drop in February) and online sales saw the strongest gains from a year ago.
“What’s going on in furniture and home building material, as well as electronics and appliances, is reflecting the activities in the housing market,” Kleinhenz told Observer. “People are in the process of renovating their homes. Sales of newly built homes and existing homes have both increased in the last year, and they need to be outfitted with new furnishing and new appliances. So those categories are often correlated.”
Sales for existing homes grew by 2.6 percent in 2017 from 2016, according to the National Association of Realtors, continuing an upward trend since 2009. New home sales also increased by nine percent in 2017 from 2016, according to Census data.