MNI REALITY CHECK: US Feb Retails Ebb Even Before Virus Crisis

--COVID-19 Will Erode Demand in Stores And Online

By Brooke Migdon

     WASHINGTON (MNI) - Retail sales in the U.S. should slow in February and

show more weakness in March as confidence plummets amid louder coronavirus

warnings, industry professionals told MNI.

     Sales likely slowed in February with Bloomberg's survey median expecting a

0.2% increase following a 0.3% gain in January. Receipts have been climbing

since a 0.4% decline in September. 

     Excluding motor vehicle and gas stations, retail sales are slow but are a

bit stronger, gaining 0.3% following a 0.4% increase in January.

     "Consumer attitudes were fairly elevated," even into early March, said

National Retail Federation chief economist Jack Kleinhenz, pointing to the

University of Michigan and Conference Board measures. The former Cleveland Fed

economist said some consumers reacted to early virus warnings by stockpiling,

which could inflate  the numbers.

     Auto sales were also pumped up in February by warm weather and the extra

day added for the Leap Year, momentum that will be replaced by March by health

concerns about visiting dealerships. 

     "We certainly expect that sales will have softened," in March, a "pivotal"

month for figuring out demand, said Cox Automotive analyst Michelle Krebs.

"We're hearing showroom traffic is down at some dealerships depending on

location, certainly in places like Seattle." More consumers may avoid

dealerships about half of potential buyers concerned about shaking hands or

touching objects there, according to a Cox Automotive survey. 

     Online sales could provide some offset among consumers who had already

applied for loans and negotiated trade-ins before the novel coronavirus

dominated the news, Krebs said. 

     Gas station sales should also drop in February as crude oil prices

plummeted. The price of gasoline fell 3.4% in February, according to the most

recent CPI report, and could tumble in March after along with crude prices after

OPEC and Russia flooded the market.

     Sales will stumble in the coming months as the virus not only drives buyers

away from shopping centers, but erodes overall confidence, said Gary Raines,

chief economist at the Footwear Distributors and Retailers of America.

     "We're going to see sentiment shift downward," he said. "Consumers are

going to be less willing to open their purses."

--MNI Washington Bureau; +1 202 371 2121; email: brooke.migdon@marketnews.com

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