The economy still looks great for President Trump as retail sales grow, but only by the slightest of margins.
Total retail sales for February increased by 0.1 percent to $474 billion in comparison to the previous month as reported by the Commerce Department on Wednesday. This marks an increase of 5.7 percent above February 2016.
Analysts expected a drop in sales for February after a stronger than expected performance in January.
“February was in line with expectations,” said Paul Ferley, assistant chief economist at Royal Bank of Canada. “With job growth being so strong, I think we can see some strengthening in sales activity for next month.”
In the report, the department also revised the January sales gain to 0.6 percent from 0.4 percent.
Not many businesses showed an increase in sales from January. Building materials was the big winner for the month with a 1.8 percent increase in sales thanks to a warmer than normal February. Other businesses that saw an increase were online stores at 1.2 percent, health and personal care stores as well as furniture stores both increased by 0.7 percent.
Electronics and appliance stores had the biggest decline in sales at 2.8 percent. Other businesses with lower sales were motor vehicles by 0.2 percent, gasoline stations by 0.6 percent, clothing stores by 0.5 percent, general merchandise stores by 0.2 percent, miscellaneous stores by 0.8 percent, food services and drinking places by 0.1 percent and sporting goods, hobby, book and music stores by 0.4 percent. Food and beverage stores sales remained unchanged.
A delay in tax refund checks by the IRS was the biggest blow to February’s sales numbers. Many Americans begin filing taxes in early February in hopes of receiving their refund early in the month, but due to a new tax policy, the IRS put a hold on early filers.
In January, the IRS announced those claiming the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) will have their refunds put on hold. The hold is part of the Protecting Americans from Tax Hikes Act of 2015, which contains several measures designed to curb tax fraud. The IRS said the delay allows for additional time to detect fraudulent tax returns. Refunds started releasing on Feb. 15, but funds would not show up in bank accounts and debit cards until the week of Feb. 27.
“People in the low-income bracket tend to spend their refund as soon as they get them,” said Michael Englund, chief economist at Action Economics LLC. “Refunds were $70-80 billion behind schedule.”
Another factor in declining sales was an increase in gas prices in February. Gasoline prices dropped at the end of January to $2.29 a gallon but finished the month of February at $2.31 a gallon. Sales at gas stations are still much higher than February 2016 by 19.6 percent.
One business sector that took a hit in February, but is still doing well in comparison to last year is food services. With a 3.7 increase from February 2016, some restaurants found that technology is helping their bottom line.
“Apps like UberEats and Yelp are bringing in more sales and customers,” said Joseph Meijia, owner of Blanco Café. “They’re spreading our name out there, and we get customers who aren’t from the neighborhood.”
The economy President Trump inherited appears to not be slowing down.
Strong economic indicators such as 77 months of consecutive job growth, an unemployment rate of 4.7 percent and six months of retail sales growth show that the U.S. economy is growing. In anticipation of that growth and to avoid inflation, the Federal Reserve approved an increase in its key interest rate on Wednesday.
The Fed raised the key interest rate by 0.25 percent, from 0.75 percent to 1 percent. This was the third time the rate has increased since the Great Recession. Credit cards and loans will soon see an increase in interest rates along with an eventual increase in savings account rates.
This is the second month of retail sales increase since President Trump took office. There are no signs indicating that Americans are afraid to spend their money in a “Trump America.”