Retail sales rebound in February in sign of consumer spending resilience

Updated Thu, Mar 14, 2024, 8:37 AM 2 min read

Retail sales rebounded in February after seeing their steepest decline in nearly a year during the month prior.

Retail sales rose 0.6% in February from the previous month, according to Census Bureau data. Economists had expected a 0.8% increase in spending, according to Bloomberg data. January retail sales previously posted a surprise 1.1% decrease.

"The modest rebound in retail sales in February suggests that consumer spending growth slowed in early 2024," said Michael Pearce, Oxford Economics deputy chief US Economist.

February sales, excluding auto and gas, increased by 0.3%, in line with estimates.

Building materials and garden equipment led the gains by category, rising 2.2%. Sales gained 1.6% at motor vehicle and parts dealers while electronics and appliance stores added 1.5%. The largest decline came in furniture and home furniture stores, where sales fell 1.1%.

The check on the consumer comes as the economy has largely remained on solid footing to start 2024. Consensus projections for economic growth in the first quarter have moved higher while the labor market has continued to add more jobs than previously expected.

This strength in the economy has come as recent inflation prints have shown price increases aren't easing as quickly as initially hoped. The combination of stickier-than-expected inflation with an economy that's still growing, has economists believing the Federal Reserve can wait longer to cut interest rates without tipping the economy into recession.

"The retail sales report this month supports our view that the economy is strong but cooling," Morgan Stanley chief US economist Ellen Zentner wrote in a note to clients. "There is no reason for the Fed to rush the next move in rates. We expect the Fed to first cut the funds rate in June, once the Fed has enough data to feel confident that inflation is moving sustainably towards the 2% target."