Retail Sales Fell Sharply in February

The retail sales report for February, out this morning at 8:30 a.m., showed consumers curbed their spending significantly last month, far more than economists were expecting. This should boost the case for aggressive rate cutting by the Federal Reserve when it meets on March 20, but it might also be weak enough to spur greater anxiety over the economic slowdown. The market wants interest rate cuts to get the economy back on its feet.

Retail sales fell 0.2% in February, well below expectations of a 0.3% rise. Excluding autos sales, retail sales fell 0.3% compared with expectations of a 0.2% rise. January figures were revised sharply upward to show 1.3% growth in both the headline and core components, which exclude auto sales.

These numbers show that consumer confidence is doing plenty of damage to the economy. The biggest drops were registered in eating and drinking as well as furniture sales, those areas that had the biggest jumps in January. Auto sales rose 0.2% after a 1.3% gain in January (revised up from 0.6%). Building materials were up 1.6% after a revised 0.5% increase in January. And sales of durable goods were unchanged after a 1.6% gain in January. They were revised higher from 0.8%.

Nondurable goods decreased 0.3 percent from January, but were up 5.5 percent from February 2000; drugstore sales were up 13.3 percent from last year, while apparel sales were up 5.8 percent from last February.