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U.S. retail sales expected to heat up with warm weather

March 6, 2014

U.S. retail sales slowed throughout January and February, likely due to excessively cold weather.

U.S. retail sales slowed throughout January and February, likely due to excessively cold weather.

A recent Reuters report, noting that large parts of the country have been plagued with freezing temperatures, detailed that economists are expecting a rebound from slow sales in the coming months thanks to warming weather. According to the report, retail sales had decreased by 0.4 percent throughout the past month. 

“Today’s data unequivocally show that the unusually cold winter weather is weighing on economic activity. Consumer spending has literally frozen,” Harm Bandholz, chief economist at UniCredit Research, told Reuters. 

Cold weather is creating a definite slowdown in sales among retailers
Another report solidified the idea that the cold winter months were causing a slowdown in sales growth at online and brick-and-mortar retail outlets. According to an Investor’s Business Daily report, analysts are currently projecting that retail sales in February will only be up by 2.7 percent year-over-year during February 2014. For comparison, sales had spiked up by 3.3 percent year-over-year during the previous month. 

“Given the adverse weather conditions that dominated much of the country, expectations are muted for February,” Ken Perkins, president of Retail Metrics, told Investor’s Business Daily. “We would expect investors to give retailers a pass for last month. But this puts the pressure on retailers to see a rebound in sales in the back half March. If the sales pop fails to materialize, this would be very worrisome.”

The fourth quarter of 2013 was not kind to retailers, according to the report. The news outlet noted that analysts expect retailer’s overall fourth quarter earnings to drop by 6.7 percent when compared to the same timeframe during the previous year. 

“It’s still too early to conclude that the soft patch is a more ominous sign of a more meaningful slowdown in the economy,” noted Jim Baird, chief investment officer at Plante Moran Financial Advisors, while speaking with Reuters. 

As Baird suggests, it’s possible that retail sales will bounce back as the spring and summer months approach. The Investor’s Business Daily report concluded with welcome news for all retailers hoping to draw more consumers to their credit card and debit card payment processing terminals in the coming months: analysts told the news outlet that they expect retail earnings throughout the entire first quarter of 2014 to increase by 7.5 percent.  

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