By: Tadia Toussaint
Retail sales not only declined in February, but January’s report was significantly revised down, raising concerns about consumer sentiment.
The Commerce Department’s report shows signs that the economy is not as strong as economists described last month. February’s retail sales decreased 0.1 percent. Falling oil prices and low sales at gas stations played a key role in last month’s decline, with gas station sales declining 4.4% since January. But other sales also fell.
The December 2015 to January 2016 percent change was revised from up 0.2 percent to down 0.4 percent, showing a decline instead of the previously reported steady increase.
The decline in the retail sales report shows that consumers still aren’t confident in the economy and are not spending their money, very different from last month’s analysis. January’s initial report that showed the increase of 0.2% signaled a healthy growing economy. A strong retail sales report shows a thriving economy, the perfect foundation for the Federal Reserve to increase interest rates for banks. The steady increase began to raise eyebrows and question whether or not the Federal Reserve would decide to increase the interest rates or keep them stagnant.
The growing concern was that having these revised numbers could now influence a change in heart for Federal Reserve’s intention to increase interest rates.
Gennadiy Goldberg, an economist at TD Securities doesn’t think one month’s data will influence the Federal Reserve’s decision too much.
“Month to month gyrations are common in these reports,” he said. “Retail sales don’t include spending on services which is a huge chunk of the U.S. economy so it definitely doesn’t give them the entire picture but it gives them some of it.”
Janet Yellen announced yesterday that the Fed decided to keep the rates unchanged because of the economic turmoil abroad and the falling oil prices.
Despite the dip in last month’s retail sales, not all sectors are struggling.
Data from U.S. Department of Commerce
The building material, garden equipment, supplies dealers saw a 1.6% increase in sales in February. On a broader scale, the housing market is doing well and people are remodeling and reconstructing their homes/businesses.
Joseph Medaglia, a sales executive at Raw Equipment Corporation who has been with his company for 19 years said he has seen a notable increase of sales in the past few months. The company has been supplying some of New York City’s major reconstruction projects like LaGuardia airport and bridge and highway renovation.
“We have a lot of work in our area, major projects that are ongoing right now, more than we’ve seen in years.”
