US retail sales fell a larger-than-expected 1.3% in February as car sales plunged and consumers took a breather after spending big in January, a government report shows today. It was the first decline in sales since August and larger than the 0.8% drop forecast by Wall Street.
But the Commerce Department revised up January sales to a whopping 2.9% rise from the originally reported 2.3% gain.
Analysts shrugged off February's weakness as an inevitable pullback after unusually warm weather boosted shopping in January, and said consumer spending and economic growth would likely be strong in the first quarter.
The retail sales report showed demand outside the car sector was down 0.4% in February, in line with analyst expectations, in the largest decline since April 2004. Sales of motor vehicles and parts dropped 4.6% last month, the biggest drop since August 2005, after a 4.2% surge in January, the report showed.
Sales of furniture, clothing, electronics and appliances all fell. Petrol station sales fell 1.6% as gas prices eased. Retail sales, excluding petrol, were down 1.3% in February after being up 2.8% in January.
In its report on the current account, which includes both trade in goods and services and investment flows, the Commerce Department said the deficit widened $136.9 billion from 2004 to $804.9 billion. That represents 6.4% of gross domestic product, up from 5.7% in 2004.
The ballooning current account deficit has been attributed to high US consumer spending and a low saving rate. Some economists believe it leaves the US vulnerable to the changing appetites of foreign investors and may be unsustainable in the long run.
Meanwhile, a separate report showed the US current account deficit, the broadest measure of US trade with the world, widened more than expected in the fourth quarter to a record $224.9 billion, pushing the 2005 gap to a record $804.9 billion. The quarterly shortfall in the current account was much larger than Wall Street forecasts for a deficit of $217.7 billion.
The Commerce Department revised down the current account deficit in the third quarter to $185.4 billion, from the previously reported $195.8 billion. While some analysts have said the ballooning current account deficit is unsustainable, others have said it simply reflects the fact that Americans spend more and save less than the rest of the world.
