February 2018 Retail Sales

Retail sales suffered a setback in February according to the Census Bureau.  Falling 0.1 percent, this latest decline matched the upwardly revised drop of 0.1 percent in January (originally -0.3 percent).  Nevertheless, year-over-year, this consumer-driven indicator is up 4.0 percent, representing an acceleration for the trend versus a month earlier (3.6 percent in January).

A few components were positive in the period.  Purveyors of building material and garden equipment & supplies made up for their previous losses and then some, rising 1.9 percent after falling 1.7 percent to start the year.  Clothing and accessories stores added 0.4 percent after a prior uptick of 0.9 percent.  Sporting goods, hobby, book, & music stores jumped 2.2 percent, more than erasing the decline of 1.5 percent in January; however, this category remains negative on a year-over-year basis (-3.5 percent).  Miscellaneous firms moved up marginally, rising 0.1 percent.  Nonstore retailers jumped 1.0 percent and climbed 10.1 percent in the past twelve months. 

Atlas’ favorite category continued improving as well.  Food services and drinking places tacked on another 0.2 percent in February.  Additionally, their year-over-year trend accelerated to 2.7 percent from 2.2 percent in January.  Arguably, this outlay is the most sensitive discretionary spending Americans can do.  Regardless of where the economy is within the business cycle, consumers have to eat; however, eating at home substitutes meals at restaurants during economic slowdowns.  Thus far, Americans are willing to spend a growing amount of money on food away from their kitchens. 

Retail sales are showing mixed signs for the economy; however, its trend remains positive.  Our economy is years from the cycle bottom of June 2009, but this indicator does not fully support the notion that a cycle top has been reached either.  More growth (even if it is slower) seems to be the most likely outcome for America.