In yet another positive sign for the economy, retail sales for February rose more than expected, tamping down worries that higher gas prices and taxes would take a bite out of consumer spending.
Retail sales jumped 1.1 percent in February, according to the Commerce Department, the biggest jump in five months. Consumer spending is an important measure of economic growth because it makes up two thirds of the economy.
So-called core sales–sales minus automobiles, gasoline and building materials–rose 0.4 percent. The core sales rise is a sign that consumers are holding on despite high taxes.
There may be yet another bump in retail sales in coming months as tax refunds are mailed out.
We saw hints of this strong report in the February unemployment numbers that showed increased retail hiring.
Economists have worried that consumers would rein in spending as a temporary 2 percent cut in payroll taxes expired, meaning fewer dollars in every US paycheck.
“At least so far, the increase in taxes has had minimal impact on household spending, showing that the economy retains a lot of momentum,” economist Joel Naroff of Naroff Economic Advisors said in a note.