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Last Update: 13-Mar-13 10:37 ET
Tax Hikes Have Little Impact on Consumer Spending Behavior
Retail sales increased a solid 1.1% in February after rising an upwardly revised 0.2% (from 0.1%) in January. The Briefing.com consensus expected retail sales to increase 0.5%. Overall, the retail sales report was extremely encouraging. The effect of the tax increases following the fiscal cliff deal has not stunted overall demand. The strong gains in wages that were detailed in the February employment report also played an important part in keeping consumption levels higher than expected. Those gains allowed consumers to spend more while also adding to their savings. As long as employment -- and wages -- can continue at February's pace, consumption will likely exceed our projections.
Higher gasoline prices played a major role -- but not the entire role -- in the increase in sales. Sales at gasoline stations rose 5.0% in February after increasing 0.7% in January and accounted for 0.7 percentage points of the 1.1% gain. That leaves about a 0.4% gain in goods consumption after adjusting for inflation, which is enough to boost overall growth forecasts for the first quarter. Motor vehicle sales increased 1.1% in February after falling 0.3% in January. The gain was slightly more than what was estimated following the motor vehicle manufacturer sales report and subsequent information about an increase in fleet allocations. Excluding motor vehicles, sales rose 1.0% in February. That is up from a 0.4% (from 0.2%) gain in January and well above the consensus expectation of a 0.5% increase. Core retail sales -- which exclude the highly volatile auto dealers, building materials and supply stores, and gasoline stations -- increased 0.4% in February after increasing 0.3% in January. These data also point toward stronger-than-expected first quarter consumption growth.
Higher gasoline prices played a major role -- but not the entire role -- in the increase in sales. Sales at gasoline stations rose 5.0% in February after increasing 0.7% in January and accounted for 0.7 percentage points of the 1.1% gain. That leaves about a 0.4% gain in goods consumption after adjusting for inflation, which is enough to boost overall growth forecasts for the first quarter. Motor vehicle sales increased 1.1% in February after falling 0.3% in January. The gain was slightly more than what was estimated following the motor vehicle manufacturer sales report and subsequent information about an increase in fleet allocations. Excluding motor vehicles, sales rose 1.0% in February. That is up from a 0.4% (from 0.2%) gain in January and well above the consensus expectation of a 0.5% increase. Core retail sales -- which exclude the highly volatile auto dealers, building materials and supply stores, and gasoline stations -- increased 0.4% in February after increasing 0.3% in January. These data also point toward stronger-than-expected first quarter consumption growth.
