U.S. retail sales excluding autos slipped by 0.1% in February, extending a slump, according to a new report from the giant lender Bank of America (BAC - Get Report) , which cited its own data on credit- and debit-card spending.
But a rebound in consumer spending is likely in coming months, according to the report Thursday from the Charlotte-based bank's economists, offering a positive sign for the economy as the stimulus fades from President Donald Trump's late-2017 tax cuts.
The decline in February was partly caused by delays in processing U.S. income-tax refunds, which hit low-income households especially hard, the bank said.
The delays weighed on spending at a time when consumer confidence already was sagging due to the stock market's steep selloff in December, creating a "negative wealth shock and hurting confidence," and the lingering effects of the prolonged U.S. government shutdown, the bank said.
"We believe that once these special factors reverse, the reality of healthy fundamentals will set in, supporting spending in the spring," the Bank of America economists wrote.
The bank's report offers an advance glimpse of official U.S. retail-sales data that are reported on a lagged timeline.
A release earlier this week from the U.S. Census Bureau showed that retail sales excluding autos climbed 0.9% in January, ahead of economists' projections for a 0.2% increase.
The Census data were heavily scrutinized by traders following a reported 2.1% decline for December, which was the third-biggest on record and was viewed by some investors as a sign that the economy might be slowing faster than previously expected.
According to the Bank of America report, the Internal Revenue Service has imposed stiffer verification requirements for filers claiming the Earned Income Tax Credit or Additional Child Tax Credit, pursuant to a law passed a few years ago.
Refund checks under the program were delayed by the IRS until Feb. 27, according to the agency's website. In prior years they were sent out as early as Feb. 15.
The Earned Income Tax Credit, or EITC, primarily benefits low- or moderate-income families, totaling about $63 billion in 2018 for about 25 million eligible workers and families. The average credit was $2,488.
"The good news is that the cumulative amount of refunds caught up by the end of the month," according to the report. "However, there was still less time for consumers to spend their refunds in February."