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US Retail Spending Inches Up, Gasoline Sales Drive February Rebound
March 15, 2024
Retail spending in the United States showed a modest recovery last month, with Americans increasing their purchases, especially in gasoline, according to the latest report from the Commerce Department released on Thursday.
In February, retail sales across various channels, including stores, online platforms, and restaurants, grew by 0.6%, bouncing back from January’s revised 1.1% decline. Despite falling slightly below economists’ predictions, this uptick suggests a renewed consumer activity.
The decline seen in January was largely attributed to severe weather conditions, which kept consumers indoors. However, the broader economy remains robust, fueled by ongoing employment growth and steady wage increases. Retail spending has shown positive momentum in seven out of the past 10 months leading up to February.
Notable increases in sales were observed in various sectors. Home improvement stores saw a significant surge of 2.2%, followed by a 1.8% increase in car sales, a 1.5% rise in electronics and appliance purchases, and a 0.4% uptick in restaurant sales. Gas station sales also saw a notable increase of 0.9% compared to January.
Conversely, furniture sales experienced a decline of 1.1% in February, while grocery stores, clothing retailers, and online platforms also reported lower sales figures for the month.
Despite the uptick in spending, concerns loom regarding potential factors that could dampen consumer activity. Economists anticipate the impact of higher interest rates and diminishing pandemic savings to gradually influence spending habits. However, the current solid labor market conditions and improved consumer sentiment toward the economy may mitigate these effects.
Additionally, ongoing inflation remains a pressing issue, with prices continuing to rise across various sectors. This persistent inflation, combined with reduced government benefits, particularly affects lower-income consumers.
Uncertainties surrounding inflation’s trajectory have raised concerns among investors about the Federal Reserve’s monetary policy. The possibility of prolonged elevated interest rates could potentially impede economic growth and consumer spending.
As the Federal Reserve prepares to convene next week to discuss monetary policy, market analysts anticipate a cautious approach, with expectations leaning towards maintaining current interest rates. However, the trajectory of inflation remains a key factor influencing future decisions.
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