Americans spent at the fastest pace in five months in February, boosting retail spending 1.1 percent compared with January. About half the jump reflected higher gas prices, but even excluding gas purchases, retail sales rose 0.6 percent.
The report Wednesday from the Commerce Department showed that Americans kept spending last month despite higher Social Security taxes that took effect this year. The retail sales report is the government’s first look each month at consumer spending, which drives about 70 percent of economic activity.
Core retail sales, which exclude the volatile categories of gas, autos and building supply stores, rose 0.4 percent in February compared with January.
Economists were encouraged by the stronger-than-expected gain in retail sales. Some said the increase means the economy may be growing faster in the January-March quarter than they had forecast.
“This all suggests that the hit to spending from the payroll tax cut and higher gasoline prices, which reduce the amount of cash available to spend on other items, hasn’t been too bad,” said Paul Dales, senior U.S. economist at Capital Economics. “The recent pickup in both employment and earnings growth bodes well for consumption growth later in the year, too.”
Auto sales rose 1.1 percent after a 0.4 percent January increase. The February gain was the biggest since December. Sales at gas stations surged 5 percent, the biggest advance since a 6 percent rise in August.
Sales at general merchandise stores, a category that includes major department stores such as Macy’s and big discount stores such as Wal-Mart and Target, rose 0.5 percent in February. But the department store category as a whole fell 1 percent.
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