U.S. retail sales fell more than expected in February as consumers pulled back on their spending, but the broader economic outlook for this year remains strong with the injection of another $1.9 trillion in federal stimulus.
The value of total sales decreased 3% from the prior month, the Commerce Department said Tuesday. Economists surveyed by Refinitv expected sales to fall 0.5%. It follows an increase of 7.6% in February, revised Commerce Department figures show.
The so-called core retail sales, which excludes automobiles, gasoline, building materials and food services and is most closely correlated with the consumer spending aspect of the nation's gross domestic product, decreased 3.5% last month.
Still, sales are likely to accelerate in coming weeks and months: Last week, President Biden signed into law the American Rescue Plan, which includes a third round of stimulus payments worth up to $1,400 for many Americans, an extension of unemployment benefits at $300 a week through Sept. 6 and a generous one-year expansion of the child tax credit.
The measure also provides hundreds of billions of dollars to state and local governments to accelerate vaccine distribution.
The anticipated rebound in retail sales will be bolstered by more businesses reopening as states ease virus-induced restrictions and more Americans are vaccinated.