February 2013 Retail Sales

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The Census Bureau reported that seasonally adjusted retail spending increased by a robust $4.4 billion or 1.1 percent (MarketWatch had expected +0.7 percent) during February as higher sales at gas stations trumped the drag from food service & drinking places. The gain was the largest in five months.

“It appears that, for now at least, consumers are willing to run down savings or take on additional credit to maintain spending,” said Andrew Grantham of CIBC World Markets. “However, with the savings rate already extremely low, it may be a matter of when, rather than if, consumers need to curtail their enthusiasm for shopping.” 

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As was the case in January, however, February’s increase can once again be largely attributed to seasonal adjustments since -- on an unadjusted basis -- overall sales fell by $1.3 billion (0.4 percent). Cells with a yellow background in the figure above indicate a decline from the previous month; green indicates an increase from the previous month. February marked the first time since 2010 that unadjusted retail sales retreated in consecutive months, which reinforces our hypothesis that elevated gasoline prices and higher taxes are, in fact, taking a bite out of consumers’ wallets. 

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Although February’s seasonally adjusted retail sales reached a new all-time high in nominal terms, adjusting the data to account for inflation and population growth shows that sales have yet to recover their November 2007 high; moreover, sales are less than 2.5 percent above their January 2000 level.

The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.