Retail Sales and US Dollar Talking Points:
February Retail Sales Miss Expectations in Stimulus Check Interlude, USD Stronger
US MoM Retail Sales for the month of February printed at -3.0%, their sharpest contraction since April of 2020 and a disappointment compared to the already weak forecast of -0.5%. Core Retail Sales (ex Autos) printed at -2.7% versus a forecast of only -0.1%. However, the already strong print in January’s retail sales was revised upward, from 5.3% to 8.3%.
While February’s retail sales miss may seem concerning, a number of factors were likely at play. Poor weather across the country in February could have had a negative impact on consumer spending. Consumers also ran down their stimulus payments in January, prompting the strong print for that month. It can be reasonably expected that the metric will boom again in March as the third round of stimulus checks hit consumer accounts.
Retail sales figures serve as an important proxy for GDP data as consumer spending accounts for around 2/3rds of US GDP. Retail Sales collapsed in March and April 2020 as lockdowns were instituted before strongly rebounding in May and June as businesses reopened and consumers spent stimulus checks and other built-up savings. As cases began to climb again in the fall, retail sales posted three consecutive months of small contractions. January’s 5.3% print marked the first rise in retail sales since September 2020, but February’s print marks another contraction in the metric.
While February’s decline in retail sales could be seen as worrying to the
