Store concept with cash register and sign come in we are open
It’s been a financial doozy out there for consumers lately, to say in the very least. Inflation continues to bubble up to the forefront of many stories, followed by tech sector layoffs and skittishness within the banking sector.
On March 15, the U.S. Census Bureau released its results for retail sales in February. The report is a useful roadmap that provides insight into what consumers are prioritizing and spending on. It also showcases the segments within retail where consumers might have cut back or pared down.
February was a mixed bag for consumers. In response to the results, Chip West, a retail and consumer expert at Vericast, a marketing solutions company, noted that higher interest rates seemed to affect some consumer discretionary purchases.
“Consumers have been under intense pressure from continued high inflation where interest rates are headed,” writes West in an update.
Overall, consumers spent $697.9 billion in February, sightly down from $700 billion in January. Within these numbers, many categories for this round showed slow to no increase, while some declined.
Digging a bit deeper, non-store retailers were among the biggest winners, with consumers spending $112,722 billion, up from $110,956 billion in January. General merchandise stores reported $73,794 billion, up from $73,392 billion. Within that category, department stores edged down to $11,579 billion from $12,056 billion in January.
Groceries have been a large part of the spending narrative over the past few quarters because of inflation. The increase in spend on food and groceries continued in February with consumers plunking down $81,014 billion in February, up from $80,618 billion in January. During those same time periods, grocery stores were up slightly to $72,540 billion from $72,142 billion.
Consumers paid slightly more for electronics (a total of $7,214 billion) during this time period as well.
We are also still tightening our proverbial belts by cutting back on some purchases, and February was no exception. Furniture and home furnishings, for example, took a hit, reporting $12,048 billion in sales compared to $12,359 billion in January.
In the automotive department, motor vehicles and parts also slowed to $130,647 billion from $133,037 billion. Meanwhile, gasoline stations reported $58,379 billion, down from $58,721 billion in January.
Finally, we bought less clothing totaling $26,691 billion compared to $26,906 billion in January and dined out slightly less at $92,740 billion in February, down from $94,789 billion in January.
The results are not all dismal, according to Neil Saunders, managing director of GlobalData. Saunders sees retail sales as being in “positive territory with overall spending up by 5.6% over the prior year.”
Importantly, “Consumers continue to dig deep to fund consumption and are showing remarkable resilience despite various unfavorable economic factors,” according to Saunders. Despite digging deep, however, consumers are also “gradually changing behaviors to cope with higher inflation and numerous pressures on their household budgets.”
As we head into spring, one thing remains clear: the consumer may be battered, but the spending isn’t going away. The next report is expected on April 14 and will help us round out and complete the spending picture for the first quarter of 2023.
Source: https://www.forbes.com/sites/gracelwilliams/2023/03/29/the-spending-breakdown-heres-what-we-bought-in-february/