Retail Sales
Total retail sales rose for the eighth straight month, increasing 1.0% in February following a 0.7% increase for January. Gains were spread across most retail categories. Only three categories saw declines this month. The largest decline came from furniture/home furnishings (-0.8%), followed by general non-store retailers (-0.3%) and health and personal care (-0.3%). Core sales were up 0.6% for the second consecutive month. Sales were up 8.9% over the past year. These latest numbers confirm the expectations that consumption growth will remain strong this quarter.

International Trade Balance
The U.S. trade deficit in goods and services widened to $46.3 billion in January from $40.3 billion in December. Exports increased 2.7% to $167.7 billion and imports rose by 5.2% to $214.1 billion. Higher oil prices and a greater demand for capital goods drove the increase in imports. The trade deficit in goods widened by 11.6% to $59.8 billion and the trade surplus in services rose to $13.4 billion in January. With imports rising again, the large improvement in the trade deficit in the fourth quarter will likely be partially eroded in the first quarter of this year.

Consumer Credit
In January total consumer credit grew 2.5% at an annual rate, or $5 billion, to a total of $2.41 trillion. Consumer credit increased for the fourth month in a row, driven by increases in non-revolving credit. Notably, revolving credit dropped again after December’s increases broke up a 27 month decline. Revolving balances fell by 6.1% at an annualized rate, to $795.5 billion. Non-revolving credit expanded by $9.2 billion in January, an annualized gain of 6.9%, up from December’s gain of 1.5%. Consumer credit should continue to stabilize and expand as demand for new cars increases and lending standards ease a bit.