By the Numbers

Featuring brief segments of economic analysis from our senior economist Michael Bazdarich, PhD.

Sign up to receive an email as pertinent data are released.

February Retail Sales Bewaring the Ides of March

Retail sales underperformed relative to expectations today, with headline sales down modestly in February (-0.2%) on the heels of a sizable downward revision to January levels (-0.4%) and a modest upward revision to December (+0.2%). Excluding cars, gasoline and building materials, the "control" measure we track rose 0.1% in February, accompanied by a -0.4% revision to January and a +0.2% revision to December.

Just to recap all these changes, headline sales had shown gains of +0.2% in both December and January, and these were revised to +0.3% and -0.4%, respectively, followed by a 0.1% decline in February. Control sales had shown 0.0% in December and +0.4% in January, and these were revised to +0.1% and -0.1%, respectively, followed by a 0.1% gain in February.

On balance, today's data were softer than expected, but not disastrously so. As seen in the accompanying chart, control sales are essentially back to their 2012-14 trend path, after having moved modestly above trend in mid-2015.

So, this is a blow to those who were looking for stronger consumer spending to buoy economic growth. Our forecast has been for steady consumer growth alongside soft capital spending and exports and a flattening homebuilding sector, aggregating to about 1.5% growth. Today's data are quite consistent with our outlook.

Within sectors, the only really strong component of retail sales was building material stores. Sales declined modestly at motor vehicle dealers, furniture stores and department stores.

One other thing to keep in mind is that each of the last 3 months of sales data feature large seasonal swings that the government statisticians must adjust for, and this is no easy feat. So swings either up or down at this time of year should be approached cautiously. Seasonal swings will be less extreme in the months to come.

Retail Sales Trends
US Economic Growth: Real and Nominal
Source: Census Bureau. As of 29 Feb 16. "Control" retail sales is total sales less vehicle dealers, service stations and building material stores.

Michael Bazdarich

Product Specialist/Economist

Mike brings more than 40 years of experience to his position. "By the Numbers" will address economic data releases that are pertinent to a broad range of investors.

Prior to joining the Firm in 2005, Mike ran his own consulting firm, MB Economics. He earned his PhD in Economics at the University of Chicago.

Sign up to receive an email as pertinent data are released.

© Western Asset Management Company 2017. This publication is the property of Western Asset Management Company and is intended for the sole use of its clients, consultants, and other intended recipients. It should not be forwarded to any other person. Contents herein should be treated as confidential and proprietary information. This material may not be reproduced or used in any form or medium without express written permission.
Past results are not indicative of future investment results. Investments are not guaranteed and you may lose money. This publication is for informational purposes only and reflects the current opinions of Western Asset Management. Information contained herein is believed to be accurate, but cannot be guaranteed. Opinions represented are not intended as an offer or solicitation with respect to the purchase or sale of any security and are subject to change without notice. Statements in this material should not be considered investment advice. Employees and/or clients of Western Asset Management may have a position in the securities mentioned. This publication has been prepared without taking into account your objectives, financial situation or needs. Before acting on this information, you should consider its appropriateness having regard to your objectives, financial situation or needs. It is your responsibility to be aware of and observe the applicable laws and regulations of your country of residence. Potential investors in emerging markets should be aware that investment in these markets can involve a higher degree of risk. Any forecast, projection or target is there to provide you with an indication only and is not guaranteed in any way.
Western Asset Management Company Distribuidora de Títulos e Valores Mobiliários Limitada is authorised and regulated by Comissão de Valores Mobiliários and Banco Central do Brasil. Western Asset Management Company Pty Ltd ABN 41 117 767 923 is the holder of the Australian Financial Services Licence 303160. Western Asset Management Company Pte. Ltd. Co. Reg. No. 200007692R is a holder of a Capital Markets Services Licence for fund management and regulated by the Monetary Authority of Singapore. Western Asset Management Company Ltd is a registered financial instruments dealer whose business is investment advisory or agency business, investment management, and Type II Financial Instruments Dealing business with the registration number KLFB (FID) No. 427, and members of JIAA (membership number 011-01319) and JITA. Western Asset Management Company Limited (“WAMCL”) is authorised and regulated by the Financial Conduct Authority (“FCA”). In the UK this communication is a financial promotion solely intended for professional clients as defined in the FCA Handbook and has been approved by WAMCL.