US retail and food service sales totaled $492 billion in February, a decrease of 0.1 percent compared with the previous month, but 4 percent above February 2017, the Census Bureau reported on Wednesday.
Retail sales were also down 0.1% month-on-month but up 4.2% over last February. The December 2017 to January 2018 percent change was revised from down 0.3 percent to down 0.1 percent. There were other factors last month that made this year better for retailers.
"Core sales-the portion of sales that bears directly on our tracking for consumer spending-rose just 0.1% in February, in contrast to our estimate for 1.1% gain". These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product.
Consumer spending, which accounts for more than two-thirds of US economic activity, appears to have slowed at the start of the year after accelerating at a 3.8 percent annualized rate in the fourth quarter. In February, the United States economy has created 313,000 new jobs. He also noted that federal income tax filing season for 2017 had a relatively late start, so people may be spending refunds later in the year. "With consumer confidence and employment growing, economic fundamentals are favorable for spending to expand in the coming months". The numbers exclude automobiles, gasoline stations and restaurants. Vehicle sales fell 0.9% in February after a similar drop in January.
But there were some pockets of strength.
The economists predicted growth of 0.3% in February.
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Furniture and home furnishings stores were up 2.9 percent year-over-year but down 0.8 percent from January seasonally adjusted. The sales in restaurants and bars rose by 0.2%.
Building materials and garden supply stores were up 5.1 percent year-over-year and up 1.9 percent from January seasonally adjusted. The increase in underlying wholesale prices supports views that consumer inflation will pick up this year.
The revenue in clothing stores increased by 0.4%, and online retailers increased by 1%.
Economists believe that a tightening labour market, weak dollar and fiscal stimulus from the tax cuts and increased government spending will lift inflation towards the Fed's 2% target in 2018.
The Fed's preferred inflation measure, the personal consumption expenditures (PCE) price index excluding food and energy, has undershot its target since May 2012.