• Subscribe

Consumer Retail Outlays Come Up Short, But Don’t Panic

In a recent article in The Wall Street Journal, analysts expect an underwhelming level of consumer spending in the February retail sales report by the Commerce Department, as the number will not compare to the unexpectedly high retail sales in January. This report is often used to indicate the health and stability of the U.S. economy, however, experts advise consumers not to panic after the release of the February report.

A recent regulation impeded the Internal Revenue Service (IRS) from providing tax refunds in as timely a fashion as they have previously been sent out. Most individuals did not receive their refunds until February 27. As of February 10, 14.1 million refunds have been sent out, totaling $28.93 billion, but this number still pales in comparison to the 29.2 million refunds – totaling $94 billion – that were sent out by February 12, 2016.

This delay in refunds may account for the lower consumer spending, as people may have decided to delay planned large purchases. According to Morgan Stanley’s chief U.S. economist Ellen Zentner, “To the extent, this large group of lower-income consumers doesn’t get their refunds until several weeks later than previously, it is likely to be felt by retailers and could be a meaningful drag on February retail sales.” However, experts predict that retail purchases will account for this “dip” in subsequent months.

Read more at The Wall Street Journal

Copyright for image: Photographer, Stock Photo, License Summary.