There’s nothing like frigid weather to inspire a spring getaway. According to the latest MasterCard SpendingPulse report, retail consumer spending in February may have chilled, but people’s travel plans definitely heated up.
Although retail sales for the month edged up a mere 2.7 percent, the weakest reading of the retail pulse since March of 2013, consumers spent time during the polar vortex planning spring break getaways, with the category of lodging experiencing the biggest gain in February.
The SpendingPulse measures consumer travel at the time a hotel reservation is booked, making this a leading indicator of consumer travel plans and their confidence in spending on discretionary items.
Drop in Spending on Gas
Not surprisingly, gasoline was a primary culprit in the retail drop-off, with sales of fuel in February falling into negative year-over-year growth territory as deep snow, ice and freezing elements kept people from traveling on roads and away from the malls.
Excluding gasoline, consumer spending in February actually grew, showing a 4.1 percent gain year-over-year, a definite improvement over the decline of .4 percent in January and the best gain since October.
Valentine’s Day Gifts
The weather may have been frigid, but love was in bloom as consumers celebrated Valentine’s Day in style. Discretionary spending at restaurants and jewelry stores saw a heartening uptick, while online retailers continued to see double-digit growth last month.
The winter deep freeze persuaded other consumers that if they couldn’t beat it, they might as well join it. The Wall Street Journal reports orders for winter boots increasing at retailer LL Bean, and Erie Sporting Goods in Pennsylvania saw a bump in sales for sporting gear related to ice fishing and skiing.
Already signs are emerging that a thaw in consumer spending is taking place as shoppers emerge from hibernation. “Higher heating bills were likely a headwind in February,” says Sarah Quindlan, Senior Vice President, Market Insights for MasterCare advisors, which produces the SpendingPulse report.
“However, this trend could quickly reverse course when the weather improves, given that employment has been stable and the housing and equity markets have been strong,” she added.
As consumers spend less on necessities like heating, they may turn their attention to discretionary items. Other factors such as higher healthcare premiums and the end of extended unemployment benefits, which impacted millions of American in late December, could have a lingering chill on their spending.