US retail sales increase solidly in February

U.S. retail sales increased solidly in February as motor vehicle purchases rebounded and temperatures warmed up, but surging gasoline prices because of war in the Middle East could crimp spending in the months ahead. Retail sales rose 0.6% after a revised 0.1% dip in January, ‌the Commerce Department's ⁠Census Bureau ⁠said on Wednesday. Economists polled by Reuters had forecast retail sales, which are mostly goods and are not adjusted for inflation, rising 0.5% after a previously reported 0.2% drop in January. The Census Bureau is still catching up on data releases following delays caused by last year's government shutdown. The U.S.-Israeli war with ⁠Iran has ‌sent global oil prices surging more than 50%, and the national average retail gasoline price topped $4 a gallon ⁠for the first time in more than three years. There are concerns that if gasoline prices continue to rise, they could offset some of the anticipated boost to consumer spending and the overall economy from tax cuts.

The month-long conflict has also reduced household net worth, with the S&P 500 index and Dow Jones Industrial Average in ‌March posting their biggest monthly decline in a long time.

Higher-income households have led consumer spending, underpinned by robust wealth levels. Retail sales excluding ⁠automobiles, gasoline, building materials and food services increased 0.5% in February after rising 0.2% in January. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product. Consumer spending slowed in the fourth quarter, helping to hold back GDP growth to a 0.7% annualized rate. The economy grew at a 4.4% pace in the third quarter.