The Frigid Weather Has Dealt Consumer Spending a Blow
NEW YORK ( MainStreet) The harsh and severe weather continued to dampen consumers' enthusiasm for spending in February, according to First Data's report.
As the frigid temperatures lingered and continued into February, the volume of spending was at 2.4%, a slight decline compared to 2.5% in January, reported First Data, an Atlanta-based payment technology and services company, which tracked sales by credit, debit and prepaid cards and checks from almost four million merchant locations.
An uptick in spending increased toward the end of February as temperatures rose and consumers started receiving their tax refunds, especially since refund volumes and values were slightly up compared to 2013.
While consumers were making purchases, they were driving less as gas station volume fell by 6.6%. Spending remained healthy at hotel, travel, food services and drinking places at 5.4%, 3.3% and 4.7% compared to January's growth of 5.4%, 2.3% and 3.3% and buoyed the overall growth.
"Consumer spending growth was again unfavorably impacted by severe weather across the nation, which hindered shopping activity for most of the month," said Krish Mantripragada, senior vice president of information and analytics solutions for First Data. "Credit card spending growth continues to be strong as consumer confidence remains pinned near post-recession highs, which has fueled consumers' appetite for credit and should support more spending growth."
Sales in February have been flat and "fairly disappointing" even though e-commerce shopping is immune to the perils of the severe cold, said Mark Venezia, senior vice president of sales North America for Spreadshirt, a Boston-based e-commerce platform.
"It does seem that February's outlook and enthusiasm for shopping was tepid at best," he said. "In Boston, March continues to be cold and dreary, but sales are brisk. We are expecting an increase of 25% this month. Perhaps this can be attributed to the longer days and optimism that come with this time of year. It is difficult to predict consumer behavior since the last holiday season we had record sales even with the shortened season."
As the weather rebounded, sales followed suit, according to data compiled by Applied Predictive Technologies (APT), a Washington, D.C.-based cloud-based predictive analytics software company. The data demonstrated an uptick in the second half of the month tied specifically to warmer weather. Retail sales for February fell by 1.1%, an improvement from January's sales which declined by 1.6%.
In the first half of February through the 14, the average temperature was 35°F and sales declined by 3.4%. However, in the second half of the month, the average temperature climbed to 43°F and sales figures grew by 1.4%, said APT, which pulled information from a subset of APT's $2 trillion in sales data or $1 of every $5 of U.S. retail sales from sales registers at over 50,000 locations across the U.S.