Well, we may have finally found what will stop Americans from opening their wallets… cold weather!
The frigid temperatures that blanketed the nation in February delivered much more than feet of snow in neighborhoods, it also poured cold ice-cold water on retail sales.
On Tuesday, the Commerce Department revealed retail sales dropped by a seasonally adjusted 3.0% last month. Data for January was revised up to show sales rebounding an impressive 7.6% instead of the 5.3% previously reported. Economists polled by Reuters had forecast retail dropping only 0.5% in February. Pretty big miss there.
Unseasonably cold weather gripped the country in February, which many moved consumer attention away from spending. But the decline in sales also reflected the fading boost from the $600 stimulus checks which were part of nearly $900 billion in additional fiscal stimulus approved in late December, along with delayed tax refunds.
While retail sales took a significant hit in February, last month’s drop left the bulk of January’s gain intact, and luckily for the nation’s economy, the decline appears to be temporary.
Why? Enter President Biden’s $1.9 trillion economic rescue packs, which is sending help your way this week, if it’s not already in your checking account.
The anticipated rebound in retail sales will also be driven by an acceleration in the pace of vaccinations, which should allow for broader economic re-engagement, even as the rate of decline in new COVID-19 cases has leveled off. Households have also accumulated $1.8 trillion in excess savings.