Retail Sales Weaken

Retail sales unexpectedly fell -.6% MoM in February (consensus +.2% MoM). January's reading was revised slightly higher by +.1% to +.4% MoM, but December's was revised down by -.3%. Motor vehicle sales were very soft, falling -1.9% MoM, followed by falling gasoline station sales of -1% MoM. Excluding autos and gas, retail sales only fell -.1% MoM. Auto sales are sitting near a three year low. The drop in gasoline sales is a bit of a surprise, and indicates that higher prices are causing consumers to cut back on unnecessary travel. But, gasoline sales are still up over 20% YoY due to the higher prices. Housing related categories remain under stress with building material purchases falling -.7% MoM, furniture sales falling -.5% MoM and electronics sales declining by -.4% MoM. Excluding autos, gasoline, and building materials, sales were unchanged in February. This figure is used for calculating GDP. Data for the excluded categories is gathered from other sources. Food and beverage sales also decreased by -.2% MoM. Categories seeing growth included health care at +.5% MoM and general merchandise +.4% MoM( though department store sales fell -.2% MoM). Restaurant sales, which are typically viewed as a good consumer sentiment indicator, saw a -.4% drop, the largest in over a year. Over the past year, retail sales have risen +6.8% YoY. When autos and building materials, which have been weak are excluded, growth was a stronger +9.7% YoY for the rest of the economy. Excluding gas, retail purchases grew +5% YoY. Economists are becoming increasingly concerned that retail sales in the first quarter will fall to the lowest level since the recession of the early 1990s. More economists now believe the U.S. has entered a recession, as employment drops and credit grows tighter. Data from MasterCard showed the largest monthly decline in spending (-1.1% MoM) in at least five years. The drop may be partially due to credit lines being reduced for many accounts.
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Initial and continuing jobless claims both rise slightly from the week before