In his latest commentary, the National Restaurant Association's Chief Economist Bruce Grindy breaks down the Census Bureau’s preliminary monthly sales data. Total restaurant sales volume declined in both January and February, as higher gas prices and the payroll tax hike impacted consumers’ cash on hand.
The overall economy appeared to generally shrug off the impact of the payroll tax hike, and the Census Bureau’s preliminary sales data indicated that total retail spending remained strong in February. However, a look inside the numbers indicates that spending in some discretionary sectors declined, which means the combination of rising gas prices and the payroll tax hike likely took their toll on consumers’ cash on hand during the first two months of the year.
According to preliminary Census data, sales at eating and drinking places, furniture and home furnishing stores, and electronics and appliances stores fell in both January and February from their December levels.
For eating and drinking places, monthly sales hit a record high of $45.7 billion in December, on a seasonally-adjusted basis. Sales rang in at $45.4 billion in January, before dipping to $45.1 billion in February. In total, this amounts to a total sales shortfall of roughly $900 million from December’s baseline level. (Note that these figures are preliminary, and will potentially be revised by the Census Bureau in upcoming releases.)
Although the payroll tax holiday won’t be returning, gas prices have begun to decline somewhat from the run-up to start the year. After rising nearly 50 cents from the beginning of January to the end of February, gas prices edged down 7 cents during the first 2 weeks in March. Further declines would help improve consumers’ cash on hand position, which will be much needed as the sequester-induced slowdown is likely to take hold in the months ahead.
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Total Eating and Drinking Place Sales
Seasonally-adjusted month-to-month percent change
Source: U.S. Census Bureau