About a month ago, I wrote that disappointing retail numbers were nothing to fret about. Record-low temperatures and high precipitation across the United States resulted in treacherous roads, dangerously cold weather, and ultimately a number of great reasons to stay inside. It came as no surprise that buying a new vehicle and a trendy swimsuit weren’t on the short list of things to do for U.S. consumers. A month later, it seems that times have changed. After a 0.6% drop in January, the Wall Street Journal reported this week that retail sales have rebounded by increasing 0.3% in February.
“Consumers appear to be emerging from their dens to visit stores and restaurants,
a sign the U.S. economy could be poised to perk up from a winter chill.”
-Morath & Mitchell, WSJ
A month later, I still believe that the slow start to 2014 is just a bump in the long road to recovery. While many are reluctant to admit that the recovery is proceeding well, the evidence is there. January’s aforementioned historically bad weather combined with a typical slow post-holiday spending pattern to spark concerns, but the optimism of the February retail news is further reinforced by the fact that February’s weather was nothing to write home about. J.P. Morgan Chase economist Michael Foroli explains that “the weather in February was worst of the winter, but retail sales still posted the best gain since October.” While beating the frigid temperatures of January, average February temperatures were again lower than historical averages. As spring approaches, March is expected to make up for the year’s slow start and reinforce the U.S. economy’s solid recovery, but it is likely that the wintry effects of January and February will leave a lasting mark on the overall economy.
“Many economists expect the nation’s overall economic growth in the first quarter to slip
below a 2% pace, after a better than 3% annualized gain in the last six months of 2013.”
Those hesitant to pin the slow start on weather point to other factors such as the end of unemployment benefits for millions of Americans in December. However, as the unemployment rate approaches the Federal Reserve’s targeted rate of 6.5%, discretionary spending should continue to increase for the average American. Additionally, cold weather costs such as utility bills will taper back to normal levels and save households hundreds in monthly costs. While it may be unlikely to completely make up for 2014’s slow start with strong spring sales, there should be optimism moving forward as we return to normal moving into March and warmer months.