U.S. Consumers Curb Spending, Due To Record Oil Prices

U.S. retail sales unexpectedly fell 0.6% in February, recording only the second drop in eight months supporting fears that the U.S is already in a contraction. Looking deeper into the breakdown, we see that six out of the ten major components declined, led by a 1.9% reduction in automobile sales. Additionally, despite record prices, gasoline and food sales were lower, suggesting that consumers are starting to cut back in those areas. Also, a decline in building materials suggests that the housing industry will continue to negatively affect the economy. Overall, discretionary spending was lower as recession concerns are starting to weigh on the American consumer. The weakening job market, tight credit markets and declining consumer confidence are increasing the downside risk to the economy and weighing on future growth.

DailyFX