American consumers continued to spend money at a rampant pace in February, causing overall retail sales to climb sharply as shoppers snapped up cars, higher-priced gasoline and new clothes.
Overall retail sales rose 1.1% in February to $265.7 billion, compared with a revised 0.4% rise in January, the
The data showed that Americans, rendered prosperous and confident by a booming labor market and steady growth in the stock market, continue to spend freely despite the shock of higher prices at the fuel pump and a series of interest rate increases by the
The sales figures were only slightly stronger than expected. Economists surveyed by
had been predicting a 1.0% jump in retail sales in February.
The fast growth in sales came in large part because drivers were paying higher gasoline prices. Those prices had surged because of the continued shortfall in oil reserves created by last year's cutbacks by oil producers.
The total dollars spent at gas stations rose 4.3% in February -- the largest rise in gas prices in nearly 11 months -- compared with January's 0.6% drop. Year over year, the value of sales at gas stations has risen 26.6%.
Excluding gasoline prices, retail sales rose 0.9%.
That comes as gasoline prices are hitting new highs. The
said Monday that after rising for nine consecutive weeks retail gasoline prices hit their highest level in more than a decade last week. Gas prices rose 2.6 cents a gallon over the prior week, and were up 55 cents a gallon from the prior year.
Consumers also flocked to car dealerships in February. Auto sales, which account for about a fourth of all retail spending, rose 1.4% to $68.4 billion in February. That came as
both posted record sales, and
reported its best sales month in more than a decade.
The strength for retailers was also distributed broadly in other areas. Sales at general merchandise stores rose 0.6% to $33.2 billion, food stores saw a 1.8% increase to $39.4 billion, and apparel retailers saw sales jump 1.1% to $11.4 billion.
Analysts say some of the rebound in February sales comes after January, when many consumers were using up food, clothing and fuel they had stored last year in case the year-2000 computer bug caused any supply disruptions.
But the strength in sales is yet another indicator that U.S. consumers, who account for two-thirds of the country's output, are not letting up in their overall strong spending habits.
That has repeatedly prompted Federal Reserve policymakers to warn that there is a potential imbalance in supply and demand, which could lead to a breakout of inflation. Some of that imbalance has been offset by gains in productivity caused by computer technology, which has enabled businesses to produce more goods with less labor. As long as productivity continues to grow, businesses don't have to raise their finished goods prices, keeping inflation at bay.
But the Fed has said that productivity might not continue to rise forever, and measures of the economy such as fourth-quarter 1999's 6.9%
gross domestic product
growth have proven worrisome. The Fed has historically thought that growth higher than 3% would be imminently inflationary.
In the last 10 months, the Fed has pushed up its key short-term interest rate by a total of one percentage point, to 5.75%, in an effort to moderate growth by incrementally restricting access to capital by businesses and consumers. But these rate increases have had little effect, as can be seen in the still-roaring economy.