In February, retail sales declined by 3% month-on-month, TD Economics reported in a Tuesday data release. The drop was larger than expected, as only 0.5% had been previously estimated for the month.
The unexpected winter weather that shut down much of the southern United States is partly to blame for the February dip, according to the report. January sales had been up by 7.6%, a boost attributed in part to the $600 fiscal stimulus payments that began to roll out at the end of December.
Most sales categories were impacted by the decline, with the exception of gas stations, which grew 3.6%, while grocery stores saw no major growth or decline. The hardest-hit sector was sporting goods, which fell by 7.5%. Nonstore retailers, general merchandise stores, autos and parts dealers and food service and drinking places all dropped significantly.
The report predicted that March sales were expected to improve significantly, as optimism grows for higher proportions of people vaccinated, lower rates of Covid-19 cases and the easing of coronavirus restrictions. Direct payments are also expected to start going out to Americans, giving more consumers the resources to spend.
“The passage of the $1.9 trillion American Rescue Plan will boost future spending,” said Maria Solovieva, an economist for TD. “This round of stimulus is coming at a time when cases are declining and lockdowns are being relaxed, which makes it easier to spend.”
