US Retail Sales Rose 1.1% in February

US retail sales rose 1.1% in FebruaryWASHINGTON (AP) - Americans stepped up spending on retail goods in February, evidence that a stronger job market is boosting the economy.

Consumers bought more autos, clothes and appliances. They also paid higher prices for gas.

Retail sales increased 1.1 percent last month, the Commerce Department said Tuesday. It was the biggest gain since September. The government also revised up the previous two months.

Some economists noted that the February increase and the revisions could lead to faster economic growth. It could also put pressure on Chairman Ben Bernanke and the Federal Reserve to rethink its plan to hold interest rates at record lows until at least late 2014.

The Fed is holding a one-day policy meeting Tuesday.

"We believe that the consumer is in better shape than recent downbeat commentary from Fed Chairman Bernanke," said John Ryding and Conrad DeQuadros, analysts with RDQ Economics, in a note to clients.

A separate Commerce report showed U.S. companies restocked at a faster pace in January, a sign that businesses expect stronger job growth to fuel more sales. Business stockpiles rose 0.7 percent in January, while sales increased 0.4 percent.

One factor driving the retail sales increase was a 3.3 percent rise in gasoline sales last month. It was the biggest increase in nearly a year and reflected a surge in gas prices.

Still, retail sales increased a solid 0.8 percent after excluding gas station sales.

Auto sales rose 1.6 percent. Department stores increased 1.5 percent, the largest gain since November 2010. And sales at appliance and electronics stores climbed 1 percent.

The February gain pushed total sales to a record $407.8 billion. That's 20.1 percent higher than the recession low hit in March 2009.

The increase comes after the best three months of hiring in two years. The economy has gained 734,000 jobs since December. That's lowered the unemployment rate to 8.3 percent.

"Retail sales picked up considerably in January and February," said Joshua Shapiro, chief U.S. economist at MFR Inc.

The government report reflected private data released earlier in the month. U.S. automakers reported having the best annual sales pace in four years in February, despite the surge in gas prices.

Retail merchants said reported a 6.7 percent increase in sales in February compared with the same month a year ago, according to the International Council of Shopping Center's tally of 21 retailers.

An unusually mild winter had depressed sales of cold weather items during the holiday season. But that turned out to be beneficial in February because it helped to lift spending on spring merchandise.

Economists are concerned that consumers could limit spending this year if their wages continue to lag inflation. And rising gas prices could put further strains on household budgets.

The average price for a gallon of gas was $3.80 Monday. That's 30 cents more than consumers paid one month ago.

The overall economy grew at an annual rate of 3 percent in the final three months of last year. But part of that growth came from businesses rebuilding their inventories. That is expected to slow in the current January-March quarter and many economists expect slower growth from the fourth quarter pace.

For all of 2012, analysts at JPMorgan Chase (JPM) forecast growth of 2.2 percent, an improvement from the 1.7 percent growth seen in 2011.


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joethightwad

Absent some indication of serious and sustained inflation taking hold, it's doubtful the Fed will reverse itself on the interest rate question. Critics of Fed policy have loudly complained about the lack of certainty on which long range business decisions could be made. The Fed gave that to them by stating interest rates will stay where they are for at least two years. Now it's up to business leaders and consumers to make the most of it.

March 14 2012 at 4:54 PM Report abuse rate up rate down Reply
1 reply to joethightwad's comment
bggdg

Actually, many of we Fed critics have loudly complained about Fed policy deflating the value of the dollar.

With monetary policy extermely accomodating, inflation already running at the top end of the Fed's stated goal, and economic activity just now beginning to accelerate, could the danger of this policy possibly be more obvious?

March 14 2012 at 9:53 PM Report abuse rate up rate down Reply
noknrc

This is more fuzzy math. people did not buy more. They only paid more for what they purchased. How is this a good sign for economic growth. last month you sell 4 boxes at one dollar each. The next month you only sell 3 boxes but at 2.00 each. This is economic growth?

March 14 2012 at 10:50 AM Report abuse rate up rate down Reply
jdykbpl45

29 Days in February in a leap year. 28 normally. More lies by Obama's minions.

March 13 2012 at 4:28 PM Report abuse +1 rate up rate down Reply
1 reply to jdykbpl45's comment
bggdg

Ummmmmm, the figures depict a 1.1% increase relative to January sales (a month with 31 days), not relative to February of last year.

March 14 2012 at 11:48 PM Report abuse rate up rate down Reply
cpo1514

How many of the sales were from Barry's Bridge Cards?????? Need more information.......

March 13 2012 at 12:15 PM Report abuse +1 rate up rate down Reply