WASHINGTON – U.S. retail sales plunged more than expected in February, their largest drop since November 2001, as spending sank across a wide range of sectors, the government said on Thursday in a report indicating war fears and snowstorms kept consumers away from the shops.
The Commerce Department said retail sales fell 1.6 percent in February, the first drop since September of last year when the economy was showing signs of flagging. The decline was far greater than the 0.4 percent dip analysts had expected and followed a revised rise of 0.3 percent in January.
February was a weak month for car sales, but even excluding autos, retail sales in February were down 1.0 percent, the biggest drop since September 2001, in the wake of the attacks on the World Trade Center and the Pentagon. The report showed a tail off in spending in a variety of categories including building supplies, furniture and clothing.
Analysts had expected a slide in February driven by snowstorms that swept the East coast.
The report will likely garner close scrutiny by Federal Reserve officials meeting next week as they consider whether the economy needs another jolt of stimulus from an interest rate cut.
One bright spot in the report was sales at gasoline stations, which rose 2.7 percent. But economists had expected that category to perform well given the surge in gasoline prices.