Retail sales in the US fell 3% in February

“The February data comes in the context of rising consumer spending on January goods,” said Ryan Wang, an American economist at HSBC. “In a sense, even a modest decline would still leave consumer spending, especially on goods, substantially since the turn of the year.”

Retail sales increased 6% in the last three months compared to the same period last year, according to the trade department.

Sales in February fell sharply as consumers spent less on cars, furniture, electronics, home improvements, health and clothing. Sales at food and beverage stores remained unchanged, while sales at gas stations rose sharply, by 3.6%, as gas prices have accelerated this year.

February is usually a quiet month for retail sales, as stores prepare for the spring sales season, including Easter. Severe winter weather in February also wreaked havoc on a U.S. strip, which could also have weighed on 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 revenue at the winery over Valentine’s Weekend up 50% compared to last year .

Woolley said the company currently relies on sidewalk pick-ups and outdoor service, due to state coronavirus mandates restricting its ability to hold wine tastings indoors. Last month, cold weather decreased the number of customers willing to sit outside, he said.

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

“You can’t pump billions of dollars into the U.S. economy and not have a share of it here,” he said. “It simply came to our notice then. We’ll see some comments on this at some point and this will probably lead to an OK 2021 “.

Economists expect an increase in retail spending in the coming months as additional government incentives are handed out from the $ 1.9 trillion plan signed into law last week and vaccines against Covid-19 lead to a decline corresponding cases and a recovery in employment levels as firms open more fully.

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

Meanwhile, new reported cases of coronavirus in the United States are approaching their lowest levels since early October, and President Biden has ordered states to allow all American adults to register for a vaccine before 1 p.m. of May.

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

“The conclusion is about the pandemic. Once the pandemic is over, you’re likely to see a big boost in consumer services, “said Raymond James’ Brown.” We think people are likely to get twisted, in terms of wanting to get out and do things. ” .

In general, American households are insured with potentially mature cash to spend, as they increased savings during the pandemic. The investigation has suggested that Americans have spent previous rounds of direct cash payments on bills, food and other goods and to pay off debt, while removing some of the funds.

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

Consumers have also pointed to a cheerful outlook on the economy. A University of Michigan consumer sentiment index rose in early March to its highest level in a year as people expressed optimism about coronavirus vaccinations and federal aid initiatives.

Other signs of economic recovery have emerged. After cutting workers in late 2020, U.S. employers added 379,000 jobs in February and the unemployment rate fell to 6.2%. The US manufacturing industry has shown steady signs of expansion.

Meanwhile, states and municipalities have continued to relax restrictions on businesses and activity as cases have been reduced. Still, public health officials have warned of a potential resurgence of infections amid fatigue among Americans with precautions such as wearing masks and social distancing.

“Consumers have the ability to spend, the willingness to spend, but on the downside, it will be twisted if the virus is detected again or variants endanger our ability to contain it,” Kleinhenz said.

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

The company is also a wholesale distributor of sweets at local grocery stores and supermarkets. Mr Scheiman said this part of the business has also been booming.

“You can tell by the way people buy and the way you buy, there is no reluctance,” he said. Buyers “have more money in their pocket,” he said, adding that the average purchase size of their customers had also increased.

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

“We’ve turned a corner substantially,” Scheiman said.

In turn, he said he had added three full-time employees to his staff and has increased the salaries of his workers by an average of 12% since the beginning of the year.

Write to Amara Omeokwe to [email protected]