Retail Sales Jump in February
Filed at 5:05 p.m. EST
By The Associated Press
WASHINGTON (AP) -- American consumers continued their spending
spree unabated in February, their confidence supported by the
best job market in a quarter-century, a stream of tax refunds
and booming stock prices.
Their buying is helping the U.S. economy shrug off the ill
effects of a rapidly rising trade deficit.
Sales -- which represent about a third of the nation's
economic output -- jumped 0.9 percent last month to a
seasonally adjusted $236 billion, the Commerce Department said
Thursday.
It was the seventh consecutive gain and came on top of robust
increases of 1 percent in January, revised up from an earlier
estimate of 0.2 percent, and 1.1 percent in December.
''Consumers are aggressively buying everything from apparel to
vehicles and anything in between,'' said economist Mark Zandi
of Regional Financial Associates in West Chester, Pa.
That's helped keep the economy strong as the global financial
crisis continued to batter U.S. farmers and manufacturers
through a soaring trade deficit. The Commerce Department said
the deficit in America's broadest measure of foreign trade,
the current account, jumped 50.4 percent last year to a record
$233.4 billion.
But Commerce Secretary William Daley said the retail sales
figures ''show that the robust growth that marked the end of
1998 has continued into 1999.''
That evidence -- with its implication of sustained profits --
drove stock prices to a record close. The Dow Jones average
burst both the 9,800 and 9,900 barriers for the first time,
settling to 9,897 at the end of trading, a gain of 125 points.
The stock and job markets are behind Americans' willingness to
buy, especially expensive durable goods such as cars and
furniture. The Labor Department said Thursday that first-time
claims for unemployment benefits remained under 300,000 for
the sixth consecutive week for the first time since 1974.
Claims edged up 1,000 to a seasonally adjusted 289,000 last
week.
''Strong spending is driving employment and strong employment
is driving spending,'' said economist Robert Dederick of
Northern Trust Co. in Chicago. ''You have a virtuous circle
that is not being broken by inflation, as is usually the case.
So the wheels keep turning.''
The latest ABC News-Money magazine poll put consumer
confidence this week tied with a record high, set in
mid-January. The weekly polls began in 1985.
Other factors supporting spending include good weather across
much of the country in February, low interest rates and
federal tax refund checks, padded by a new $400 per child
credit and two education credits.
The Internal Revenue Service said the average refund through
last week, $1,677, was $227 higher than the same period last
year.
Analysts, who continue to predict consumer spending will fade
as the year progresses, note that tax refunds will remain a
factor for only another month or two.
They also point to rising mortgage rates, which hit a 10-month
high of 7.11 percent this week, according to Freddie Mac, the
mortgage company. That should dampen refinancing, which has
put money in many consumers' pockets, and home sales, which
encourage associated sales of furniture and appliances.
Last month, auto sales were particularly strong, up 1.8
percent. And sales of everything else rose a healthy 0.6
percent.
Receipts at furniture stores rose 1 percent; building supplies
and hardware stores, 1.2 percent; apparel and accessory shops,
1 percent; food stores, 0.9 percent, the most in nearly two
years; drug stores, 1.3 percent; restaurants and bars, 0.8
percent; and gasoline stations, 0.8 percent.
Sales at department and other general merchandise stores rose
0.5 percent, a decent increase on top of an extremely strong
2.6 percent advance in January. |
