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Retail Sales Likely Softened in February Ahead of Potential Pickup

A minor hiccup in the broader recovery.
(Poungsaed-Studio)
(Poungsaed-Studio)
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Recent data show that U.S. shoppers likely didn’t spend as much on retail during February, WSJ reports.

Why It Matters: Retail spending is one metric that can indicate where we are in terms of a broader economic recovery. The last few months have indicated a rebound poised to hit as the pandemic eases, government stimulus flows in and restrictions are lifted.

Retail Sales in February: -3%

  • January sales had a revised 7.6% increase.

Ryan Wang, U.S. Economist at HSBC: “The February data are in the context of the January surge on consumer spending in goods. In some sense, even a modest decline would still leave consumer spending, especially on goods, up substantially since the turn of the year.”

A Quiet Month: February is generally a month where retail sales slow down, “as stores gear up for the spring selling season, including Easter.” Factor that in with the severe winter weather, and you might get a causality on possible reasons sales could have slowed last month.

  • As different businesses rely on outdoor operations, wintertime and cold weather both serve as natural impediments.

Looking Ahead: “You can’t pump trillions of dollars into the U.S. economy and not have some of it land here. People will spend it. We’ll see some feedback from that at some point and that will probably lead to an OK 2021,” said Richard Woolley, owner at Weathered Vineyards in New Tripoli, Pa.

  • As part of the $1.9 trillion stimulus package signed into law last week, many Americans are getting $1,400 direct payments. Coupled with rising vaccinations — President Joe Biden wants states to make all adults eligible by May 1 — and the outlook could be promising.

Justin Oh:

Yes, February 2021 retail sales are down month-over-month, but it is still 6.2% higher than it was in February 2020. I agree that, now the $1,400 stimulus checks are being distributed, that should make its way into consumer spending.

My biggest concern is overheated spending, increased inflation, and a quickly debased US Dollar. I am not apocalyptic in my predictions, but it’s definitely a risk to track and a reason why we hold a sizable amount of Bitcoin in our portfolio.

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