Brenda O’Connor Juanas, senior vice president at UBS Wealth Management, and Luke Lloyd, investment strategist at Strategic Wealth Partners, discuss retail earnings, interest rate cuts, Bitcoin’s surge to record highs, February CPI and more .
U.S. retail spending rebounded in February, but consumers may be more cautious as they continue to face high interest rates and soaring prices for everyday goods.
retail salesA measure of how much consumers spend on many everyday items, including cars, food and gasoline, rose 0.6% in February, the Commerce Department said Thursday. This figure is lower than both the 0.8% increase expected by economists at LSEG and the revised 1.1% decline recorded in January.
Excluding the more volatile gasoline and auto readings, sales rose just 0.3% last month.
“It wasn’t a strong move considering we were expecting a bigger rebound starting in January,” said Robert Frick, business economist at Navy Federal Credit Union. “Consumers have money because their inflation-adjusted incomes are rising. The question is, have they become more cautious? It’s too early to tell, but inflation is currently at 3%. It is possible, given that the employment market has remained tight and the job market is tight.” ”
Rising car insurance prices are accelerating inflation
A person shops at Kohl’s department store on March 12, 2024 in Miami, Florida. (Photo by Joe Radle/Getty Images/Getty Images)
February’s prepayment amount is not adjusted for inflation, so consumers may earn less for the same amount of money they spend.
Spending increased almost across the board, with sales at electronics and electronics stores, restaurants and bars, auto and parts dealers, and gas stations increasing markedly as prices at the pump soared.
But Americans cut back on spending on things like furniture and home improvement stores, health and personal care stores, and clothing retailers. online shoppingnon-store retail spending decreased by 0.8% from the previous month.
High inflation continues to weigh on America’s budget
Last month, sales increased in 8 out of 13 retail categories.
November 14, 2023 at the Bath & Body Works store at Dadeland Mall in Miami, Florida. (Eva Marie Uzcategui/Bloomberg via Getty Images/Getty Images)
a solid job market And in recent months, strong wage increases have helped boost consumer spending despite high inflation. But many economists predict that consumers will become more cautious as student loan payments resume and high interest rates affect the broader economy.
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In addition, more Americans are relying on credit cards to cover everyday necessities.
Credit card debt surged to a new record at the end of 2023, but Delinquency is also increasing.
“Headwinds continue to deter certain purchases. Rising interest rates, rising energy costs, and deep discomfort with price levels continue to force consumers to make budgeting trade-offs, prioritizing service spending.” “The product category is becoming increasingly neglected,” Kayla said. Mr. Bruun, Senior Economist at Morning Consult.
