U.S. retail sales fell for a third straight month in February–down 0.1%. The Commerce Department revised January sales higher than the initially reported 0.3% decline. But that still left January sales down 0.1%. That means that February marks a third consecutive decline in retail sales–the first time that’s happened since April 2012. Economists surveyed by Reuters had forecast retail sales had climbed 0.3% in February.
There’s no sign of a retreat in consumer confidence–sitting at a more than 17-year high–which has sent economists scurrying for other explanations for the drop in retail sales. One plausible theory making the rounds today says that optimism after the December $15 trillion tax cut pulled retail sales forward into the fourth quarter from the beginning months of this year.
That has led some Wall Street economists to cut their forecasts for first-quarter GDP growth. For example Macroeconomic Advisors cut its estimate for first-quarter growth to 1.7% from 2.1%. The Atlanta Federal Reserve Bank, for its part, cut its forecast to a 1.9% year over year increase from 2.5%.
The U.S. economy grew by 2.5% year over year in the fourth quarter. Recent data on construction spending, factory orders, and inventories suggest that the third estimate for fourth quarter growth, to be released later in March, could revise growth up to a 3.1% annual rate.
In other economic news, the Labor Department reported that prices at the wholesale level–excluding food and energy–rose 0.4% in February, matching January’s increase. That took the core PPI (Producer Price Index) to a 2.7% annualized rate, up from 2.5% in January and the highest year over year increase since August 2014.