On Monday morning the Commerce Department will release the February retail sales report — a count of all the retail goods and services sold. Here are five things to look out for in the report when the numbers are released at 8:30 a.m. ET.
1. A Clearer Picture
Since the government shutdown, the report had been pushed back because of lack of staffing. The December numbers showed retail sales drop by 1.2 percent, highest in nine years since the recession. There were some concerns as some economists wondered if the numbers were affected due to the government shutdown.
Consequently, in January as the government went from a complete to a partial shutdown, the numbers showed revisions from the previous report raising concerns over the effects of the shutdown on the report. But since February, the government has reopened completely, making the chances of this report may showing the full extent of the retail sales on the economy higher.
2. Recovering from the weak holiday spending?
The November retail sales report showed that the consumers were ready to spend for the holidays. Then the opposite happened, the December numbers dropped. The slump in consumer spending alluded to consumers cutting back spending, and the January report failed recover the drop.
“The U.S. economy is 70% consumption,” Christopher Low, Chief Economist at FTN Financial. With the tax refunds being smaller than previous years maybe that might reflect in the February report said Low.
3. The rise of the online retail marketplace
Online retail sales increased by 7.3 percent in the January report, an almost 5 percent jump from the December report.
With the brick and mortar stores struggling to survive and the online marketplaces like Amazon expanding rapidly, the shift in the retail experience is apparent. Consumers are heading to online spaces for their convenience. This shift may be captured in the February report if online stores capture more of the retail market.
4. The rising pressure on the Fed
The Federal Reserve Board does not plan to raise the interest rates this year after raising the interest rates last year. The reason why the Fed raising the interest rates affects spending is because commodities like cars and homes become expensive to buy leading the consumers to go out and buy less.
Since the GDP, employment and the retail sales data has been weak from previous months, the Fed is under pressure from the government to cut back the interest rates and if they do that then that effect will show in the February retail sales report, according to Low.
5. Auto sales may rise?
Data from the Federal Reserve bank of New York showed that American consumers were late by three months on their car loan payments.
Car sales have been weak from the previous months with the January reports showing a mere 0.2 percent increase in car sales demonstrating that consumers are spending less on cars. The February report might allude to a pick up or a continuing weakness of consumer spending which might end up affecting the auto industry.