WASHINGTON — Consumer spending came back down to earth last month after robust activity in January, as shoppers kept a closer hold on their wallets.
Sales at apparel and accessories stores fell a seasonally adjusted 3.3 percent in February to $16.2 billion, but were still 1.6 percent ahead of a year earlier, according to a Commerce Department report released Tuesday. Revised figures for January showed a 2.4 percent rise against the preceding month and an 8.1 percent jump from a year earlier.
Sales at department stores fell 1.4 percent in February to $18 billion and were off 2.8 percent from February 2005. This came after a 1.4 percent rise in January, which was also 0.4 percent ahead of a year earlier.
J.P. Morgan Chase economist James Glassman said the report sent some mixed signals due to unseasonable weather and fluctuations in energy prices.
“When you look through all that choppiness, what you’re seeing is consumer spending that’s gradually slowing,” he said.
Retail and food service outlets rang up sales of $335.8 billion in February, a decrease of 1.3 percent for the month but still 6.7 percent ahead of a year earlier.
With the rapid increase in home prices appearing to level off and fewer stock gains to be had since the market returned from a trough, Glassman said high-end retailers could be impacted as the well-heeled back off.
“Consumer spending is going to be supported more by the traditional jobs and income growth than by asset gains, which will bring a little better balance,” he said.
The tepid spending figures were joined by another Commerce report that showed the U.S. current account deficit — which measures trade in goods and services, and investment flows between countries — rose 20.5 percent last year to a record $804.9 billion.
“The combination of slower-growing consumer spending and a widening trade gap will dampen economic growth by midyear,” predicted an analysis by Peter Morici, professor at the University of Maryland’s Robert H. Smith School of Business. “Real [gross domestic product] growth will likely grow about 3.8 percent in the first half and 3.3 percent in the second half.”
This story first appeared in the March 15, 2006 issue of WWD. Subscribe Today.