Retail Sales Soared in February

If Americans were talking with their wallets in February, they were saying that their comfort with the economy is improving. During the month, retail sales and food services rose by $3.7 billion, or 1.0%, according to the Census Bureau. This marks the eighth straight month that retail sales have grown. At a seasonally adjusted total of $387.1 billion, the month's spending also set another new high. While rising food and gasoline prices helped boost this number, even if you take them out of the equation, sales still rose by 0.9%. It's pretty clear that Americans aren't shy about spending anymore.

First, here's the historical chart, to provide some perspective of how far consumers have come since the deepest depths of the recession:

retail sales 2011-02 cht1.png

Since December 2008, total monthly sales have risen by $51.5 billion -- an increase of 15.4%.

The rate at which retail sales and food services grew was also relatively high in February. The $3.7 billion increase was the biggest since October.

Perhaps what's most surprising about this increase is that gasoline prices began rising quite steeply in February. Oil doesn't appear to be affecting spending much yet, however. Here's the chart for spending if you take out gas stations, food and beverage stores, and food services and drinking places:

retail sales 2011-02 cht2 v2.png

In February, this measure of sales was still up 0.9%, and another new high was hit here as well. So any argument that sales are increasing by necessity due to rising oil and food prices doesn't hold water. Here's how the major components of sales changed from month-to-month:

retail sales 2011-02 cht3.png

One sector that jumps out is autos, with a 2.3% increase. This confirms what we learned earlier this month, when auto companies reported strong February sales. You can also see that spending at gasoline stations was up 1.4%. So the higher oil prices are being felt somewhat, but they don't appear to be dampening spending on other goods and services.

In fact, only two categories above saw a decline in February. Health care had a small 0.3% drop, which is probably just a blip. But furniture sales continue to fall, down 0.8% after a 1.5% decline in January. When people aren't buying many houses, they also don't need as much new furniture. So while housing sales remain low, we can expect furniture sales to continue to suffer.

Although oil prices rose significantly in February, they don't appear to be impacting consumer spending yet. But that could change if they continue to rise. At some point, Americans could begin to feel a pinch on their budgets as the price at the pump grows. If prices do hit, and soar past, $4 per gallon, then you'll likely see other spending decline, due to more money needing to be spent on gasoline and general nervousness of the effect rising oil prices may have on the economy. But at February's gas prices, the recovery still appears to be moving forward at a modest pace.

Presented by

Daniel Indiviglio was an associate editor at The Atlantic from 2009 through 2011. He is now the Washington, D.C.-based columnist for Reuters Breakingviews. He is also a 2011 Robert Novak Journalism Fellow through the Phillips Foundation. More

Indiviglio has also written for Forbes. Prior to becoming a journalist, he spent several years working as an investment banker and a consultant.

How to Cook Spaghetti Squash (and Why)

Cooking for yourself is one of the surest ways to eat well. Bestselling author Mark Bittman teaches James Hamblin the recipe that everyone is Googling.

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register.

blog comments powered by Disqus

Video

How to Cook Spaghetti Squash (and Why)

Cooking for yourself is one of the surest ways to eat well.

Video

Before Tinder, a Tree

Looking for your soulmate? Write a letter to the "Bridegroom's Oak" in Germany.

Video

The Health Benefits of Going Outside

People spend too much time indoors. One solution: ecotherapy.

Video

Where High Tech Meets the 1950s

Why did Green Bank, West Virginia, ban wireless signals? For science.

Video

Yes, Quidditch Is Real

How J.K. Rowling's magical sport spread from Hogwarts to college campuses

Video

Would You Live in a Treehouse?

A treehouse can be an ideal office space, vacation rental, and way of reconnecting with your youth.

More in Business

Just In