No rebound in core retail sales/Higher PPI/Annual seasonal adjustment in Claims data

Core retail sales in February after the harsh weather influenced January did not rebound as estimated as they were flat instead, after a .3% drop (revised up by one tenth from a decline of .4%) in the month before. That was 4 tenths less than expected and will lead to a tweak lower in Q1 GDP estimates. After falling by 2.1% in January, auto sales recovered some of that, rising by 1.6% m/o/m. Building materials rose by 2.2% m/o/m but after falling a sharp 4.3% in January (likely hurt by the weather factors we’ve heard so much about, even though it’s always winter in January). Higher gasoline prices led to a .9% m/o/m rebound in sales at gas stations after 4 months of declines.

Online retail sales fell by one tenth m/o/m and that’s the 2^nd month in a row of declines but still up a robust 10.6% y/o/y. Eating/drinking out still remains a bright spot, rising .4% m/o/m after the prior two months down and higher by 10% y/o/y. Sales fell by 1.1% m/o/m for furniture, though rose for a 3^rd month in electronics. Clothing sales were down .5% m/o/m but up 4.6% y/o/y. Sporting goods sales were flat and down slightly for department stores.

Bottom line, we can blame weather for the January sales decline but no excuses for the lack of a rebound in February. We know the savings rate is low, people are charging more, the low end consumer is stressed, more people are using Buy Now, Pay Later for everyday purchases, while the higher end consumer is spending more on experiences and less on stuff. Hat tip to my friend Eric Rosen, author of the Rosen Report, for this BNPL article, https://www.nbcnews.com/business/personal-finance/buy-now-pay-later-daily-essentials-groceries-young-adults-rcna141718.