US retail sales fall in February, January stronger

American consumers pulled back on purchases by the most in over a year as the Coronavirus was just beginning impact life in the United States.

Retail sales fell 0.5% in February, the largest decline since December 2018, reported the Commerce Department on Tuesday. Sales ex-autos dropped 0.4%, both had been forecast to gain 0.2%.

Core sales flat 

The retail sales control group, also known as core retail sales, the category that the Bureau of Economic Analysis uses to calculate the personal consumption expenditures component of GDP, was flat last month.  It had been predicted to rise 0.4%.

Core retail sales

January sales figures were revised higher in all three classifications, overall sales and ex-automobiles each jumped to 0.6% from 0.3% and the control group climbed from 0% to 0.4%.

Adjustments to the sales figures are common. Over the 12 months through January the control group figures were revised in nine months, five lower and four higher. The overall retail sales number were updated in 10 of 12 months with eight positive and two negative changes.

The Commerce Department report covers most of the consumer spending that constitutes about 70% of US economic activity. 

On Sunday the Federal Reserve reduced the fed funds target range by 100 basis points to 0% to 0.25% and restarted its quantitative easing bond purchases in an effort to limit the prospective economic damage from a period of low consumption.The central bank has been providing additional liquidity to  and to provide all the liquidity necessary for the financial system.

Equities and bond yields gain

In early afternoon trading the Dow was ahead by 600+ points as the White House detailed more plans to fight the spread of the virus and to support the economy and business.  Treasury rates were rising as well with the 10-year bond up 16 points at 0.883% and the 2-year adding 8 points to 0.437%.

US 10-year Treasury yield