Retail Sales in U.S. Fall, Consumers Hold Back in February

The Commerce Department reported on Tuesday that retail sales in the U.S. fell 0.1% last month, missing expectations for a 0.2% decline. Excluding the volatile auto component, sales slid 0.1%, while the median forecast called for a 0.2% drop.

While retail sales in the U.S. overall fell less than expected in February, according to economists polled by Reuters, a sharp downward revision to January’s sales gives cause for concern about economic growth in the current quarter and the rest of the year.

January’s sales were revised to show a 0.4% decline rather than a 0.2% increase, which was previously reported. The downward revision for the prior month coupled with January’s tepid growth, indicate consumer spending will probably remain stifled in the first quarter after growing at 2.0% on an annual basis in the fourth quarter.

U.S. retail sales–excluding automobiles, gasoline, building materials and food services–were flat after a downwardly revised 0.2% gain in January. These so-called core retail sales most-closely correspond with consumer spending in gross domestic product (GDP) and were previously reported to have increased 0.6% in January.

The Commerce Department report comes just as the Federal Reserve Open Markets Committee (FMOC) is set to gather for a two-day policy meeting. The U.S. central bank is expected to leave interest rates unchanged as policymakers monitor developments on global financial markets, domestic inflation and the labor market.