Monday, March 13, 2017

February Retail Sales and Tax Refunds

by Bill McBride on 3/13/2017 12:22:00 PM

I've mentioned this before ... although the consensus is for a 0.2% increase in retail sales in February (to be released on Wednesday), it seems likely retail sales will disappoint due to delayed tax refunds.

An excerpt from a Merrill Lynch note this morning:

Based on the aggregated BAC credit and debit card data, retail sales ex-autos declined 0.2% mom seasonally adjusted in February. ... We think there is a specific reason for the contraction in sales in February: tax refunds were delayed. This is due to a change in tax law which calls for the IRS to wait until February 15th to issue refunds to taxpayers who claimed the earned-income tax credit (EITC) or the additional child tax credit (ACTC). Although refunds nearly caught up at the very end of the month with a spike on February 23, the lack of refunds earlier in the month likely weighed on sales.