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Lower gas prices drag down retail sales in February

Shan Li Los Angeles Times

Steep drops in gas prices pushed down retail sales in February, while shoppers continued to spend frugally.

Last month, retail sales fell 0.1 percent, to $447.3 billion, from January, the Commerce Department said Tuesday. That was in line with what economists surveyed by FactSet had predicted.

In what could be a more troubling sign of tepid consumer demand, January retail sales were revised to a decline of 0.4 percent, instead of the previously reported 0.2 percent growth.

Many economists have been long predicting that cheaper gas would translate into an uptick in retail sales. However, consumers have shown a marked reluctance to spend, opting instead to bank those savings or pay down debt.

The February results could signal that the frugality will continue well into 2016, despite evidence that the U.S. economy is doing well in the face of turmoil in financial markets and slowing global growth.

In February, the U.S. added a surprisingly strong 242,000 net new jobs, quieting fears that the country was sliding toward recession.

However, wages dropped in January, dashing hopes that paychecks would start enjoying healthy increases (and likely bolster spending).

Many economists say the jobs report is unlikely to persuade Federal Reserve policymakers to boost interest rates when they meet later this month.

Auto-related categories were a big drag last month. Sales at gasoline stations fell 4.4 percent, while a decrease in auto buying pushed down motor vehicle and parts dealers by 0.2 percent, the Commerce Department reported.

Eight out of 13 categories saw a drop.

Furniture stores reported falling 0.5 percent. Electronics and appliance shops showed a 0.1 percent decline.

But some sectors enjoyed growth, including clothing and accessories, which grew 0.9 percent, and health and personal care stores, which saw a 0.7 percent rise.

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