February Retail Sales: The Strongest Gain In 5 Months

Retail sales increased at a faster pace in February, advancing 1.1% over January—the most since last September, on a seasonally adjusted basis, the Census Bureau reports. The gains were broad based, with most of the subsectors of sales showing positive monthly comparisons. The upbeat news extends to the crucial year-over-year measure as well, with retail sales climbing 4.6% for the 12 months through February, noticeably faster than January’s 4.2% annual pace. The message here is that consumer spending continues to rise at a modest rate, implying that economic momentum generally is still trending positive.

Stripping out gasoline sales pares last month’s gain to roughly 0.6%, but even after that adjustment it’s clear that spending in February picked up.

None of this would mean much if the annual rate was tumbling. But that’s not the case either: retail sales continue to show a fair amount of stability for growth in the 4%-to-5% range lately.

Overall, February is shaping up as another decent month for economic news. Friday’s payrolls report certainly looked encouraging, as did last week’s jobless claims update, which showed the four-week average of new filings for unemployment benefits at a five-year low. In other words, there are several additional—and positive—entries to last week’s economic profile for February.
Recession risk, to cut to the chase, remains low, as it has been for some time. That’s not a subjective view based on forecasting or some secret methodological sauce. Rather, it’s simply a recognition that a broadly defined review of the data continues to post signals that equate with growth. That doesn’t mean there’s nothing to worry about. But based on the numbers published to date, the business cycle continues to trend positive.
The question, then, is what happens next? That’s a coy way of asking how (or if) our representatives in Washington find a way to derail the economy’s modest but ongoing bias for growth? The political battles in the Beltway over the federal budget remain a sizable risk factor. It’s anyone’s guess whether the warring Democrats and Republicans can find common ground soon, if ever. What is clear is that there’s quite a lot at stake, namely, a (still) growing economy.