Retail Sales rose a modest 0.2% in February, well below the expected 0.6% increase. Additionally, January’s sales figures were revised downward to a 1.2% decline, the largest monthly drop in nearly four years. However, the “control group” – excluding autos, gasoline, building materials, and food services – saw a better-than-expected 1% rise.
What’s the bottom line? Retail sales are a key indicator of consumer spending, an essential component of economic activity. While the February increase was an improvement over January’s sizable decline, the data so far this year suggests consumers are growing more cautious amid economic uncertainty. Fed members will be closely monitoring future retail sales reports, as the strength of consumer spending will factor in upcoming monetary policy decisions.