The Census Bureau said that retail sales declined by 0.1 percent in February, but perhaps more importantly, it also reported that spending fell 0.4 percent in January. It was originally reported to be a gain of 0.2 percent. On the surface, this release indicates softer-than-desired spending so far in 2016. Yet, the year-over-year pace remains decent, up a modest 3.1 percent since February 2015.
To more fully understand these data, however, it is important to dig a little deeper. Much of the decline over the past two months has stemmed from reduced gasoline prices. Indeed, the average price of regular conventional gasoline, according to the Energy Information Administration, fell from $1.93 per gallon the last week of December to a seven-year low of $1.64 a gallon in mid-February. Along those lines, gasoline station sales – which are reported in nominal dollars – fell 3.3 percent and 4.4 percent in January and February, respectively. Excluding gasoline station sales, retail spending rose 0.2 percent in February, and on a year-over-year basis, that figure was 4.8 percent. That suggests a much healthier pace of consumer spending than the headline number might indicate.
Other retail sales data for February were mixed. On the positive side, there were rebounds for spending on building material and garden supplies (up 1.6 percent), sporting goods and hobbies (up 1.2 percent), food services and drinking places (up 1.0 percent), clothing and accessories (up 0.9 percent) and health and personal care (up 0.7 percent). In contrast, the following retailers had declining sales for the month: miscellaneous store retailers (down 1.1 percent), furniture and home furnishings (down 0.5 percent), food and beverage stores (down 0.2 percent), general merchandise stores (down 0.2 percent), motor vehicle and parts (down 0.2 percent), nonstore retailers (down 0.2 percent) and electronics and appliances (down 0.1 percent).