Last month, retail spending in the US increased 1.1% at the fastest pace for the last five months.
Almost half of this increase reflected higher gas prices, but even if we are to exclude gas purchase, retail sales still increased 0.6% from January. The Commerce Department published today, March 13th, a report which shows that Americans didn’t refrain from spending in February despite higher Social Security taxes, which were implemented this year. In the US, consumer spending accounts for 70% of the economic activity.
Core retail sales, not including building supply store, autos and gas sales, increased 0.4% last month, auto sales increased 1.1% after a rise of 0.4% in January and gas sales also increased 5%, the biggest rise since 6% in August. Internet sales were up 1.6% after an increase of 1.4% in January, while sales at bars and restaurants fell 0.7% and 1.6% for furniture sales.
Analysts consider that this increase in retail sales is encouraging taking into consideration the payroll tax rise, which will make most workers spend less this year. For example a person that earns $50,000 has about $1,000 less to spend this year. In February, the US added 236,000 jobs, taking the unemployment rate down to 7.7%, the lowest level seen over the past four years.