Retail spending ‘in the deep freeze’

WASHINGTON – Sales at the nation’s retailers barely budged in February as bad winter weather kept already cautious shoppers away from the malls.

The Commerce Department’s report, released Tuesday, raised fresh concerns that consumers could tighten the belt further, causing economic growth to slow even more than anticipated.

Retail sales edged up only 0.1 percent in February. Sales were flat in January as shoppers took a breather after buying briskly during the holidays.

“Households hit the deep freeze when it came to spending,” said Joel Naroff, president of Naroff Economic Advisors.

Shoppers in February cut spending on a range of goods, including home furnishings, building and garden supplies, clothing, electronics and appliances, and sporting goods, books and music. They also ate out less.

A bright spot was auto sales, which went up by 0.9 percent. That followed a decrease of the same size in the previous month.

On Wall Street, stocks tumbled as the weak retail sales report and troubles with risky mortgages added to investors’ fears about the country’s economic health. The Dow Jones industrial average plunged 242.66 points, its second-biggest drop of the year.

The latest retail sales figures were weaker than economists were forecasting. They expected sales would go up by 0.3 percent.

Excluding auto sales, which can swing widely from month to month, sales at all other merchants in February actually dipped by 0.1 percent, the worst performance since October. Economists were predicting a better showing – a 0.3 percent rise – in this category in February.

Consumer spending plays a major role in shaping overall economic activity, and therefore is closely watched by economists.

The economy has been going through a spell of sluggish growth, reflecting the strain from the housing slump and the ailing automotive industry. So far, consumers have been spending sufficiently to keep the economy expanding.

But consumers could clamp down if the housing slump were to get even worse and that could spell trouble for the economy. Gas prices, meanwhile, are rising again. An unanticipated jolt in energy prices also could be jarring to consumers, as well as to the overall economy.

“We expect consumers will become increasingly cautious,” said Nigel Gault, economist at Global Insight.