March 14, 2006

Retail Sales Drop Sharply in February

Retail sales fell 1.3% in February, surpassing analyst predictions of a 0.8% decline. Auto sales led the drop, falling 4.6%, with sales at furniture stores down 4% and clothing stores down 3.3%.

The drop followed a booming 2.9% increase in spending during January, which analysts say was partly due to unseasonably warm weather. Some blamed February's decline on colder weather and a dropoff in gasoline sales as prices continued to fall.

Economists say that the fall may be natural following a stronger-than-expected January, and that other indicators, including improved employment rates and higher wages, suggest unwavering consumer confidence. However, according to The New York Times, some economists are looking ahead to a possible slowdown in the second half of the year if home sales continue to fall and the Federal Reserve raises interest rates further.

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