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Retail Sales Take Another Unexpected Monthly Dip

Retail Sales Take Another Unexpected Monthly Dip

Written by Louis Georgakakis, in Category Content Marketing

What Does the Retail Industry Need to Do to Get Untracked?

U.S. retail sales continue to disappoint in early 2018, with an unexpected drop in February. For those keeping score at home, that represents the third month in a row this has occurred — which all leads to mounting evidence that Q1 spending will show a sharp cool-off after Q4 2017’s freewheeling spending environment.

By the numbers, according to news from Bloomberg, sales were down 0.1 percent, as opposed to the 0.3 percent analysts were looking for, matching the decreases logged in February and December, which both snuck in at 0.1 percent.

On the upside, the “retail control group” used to measure GDP was up 0.1 percent, though that too missed expectations of 0.4 percent growth. Seven of 13 major retail categories showed declines.

To read the original article published by PYMNTS.COM on March 14th, 2018, click here.

The slowdown comes in marked contrast to the 3.8 percent annualized spending rate during Q4, which was the biggest uptick in consumer spending seen in a year. Some hypothesize that shoppers are “taking a breather” after running up their household debt levels at the close of 2017. That “breather” may be enforced by the fact that real wage growth in the U.S. has been sluggish.

Areas, where the slowdown was particularly noticeable, were in auto dealers and gas stations, as well as at furniture and home decor stores, electronics and appliance sellers, food and beverage vendors and health and personal care retailers. General merchandise stores saw a 0.4 percent decline in receipts, the most since May of 2017.

On the brighter side, building material stores reported a 1.9 percent sales gain in February, following a 1.7 percent decline last month.

Back-to-back-to-back sales declines reaffirm the intransigent sluggishness of consumer spending — a reality that is a bit confusing, given that consumer confidence levels are reportedly at record highs.

Economists note that there’s more to the economy than consumer spending — even though that does drive two-thirds of it here in the U.S. and that a strong job market and rising property values will likely buoy both Americans’ sentiment and steady gains in spending in the future.

“There’s clearly some buyers’ strike going on in the last couple of months, but we know that consumer fundamentals are incredibly sound,” said Tom Porcelli, chief U.S. economist at RBC Capital Markets. “People may be surprised by the weaker numbers here, but it’s par for the course after a stronger fourth quarter.”