US Retail Rises in February despite higher Taxes

Retail sales rose solidly in February as Americans bought automobiles and other goods even as they paid more for gasoline, suggesting consumer spending this quarter will hold up despite higher taxes.

The Commerce Department said on Wednesday retail sales increased 1.1 percent, the largest rise since September, after a revised 0.2 percent gain in January.

Economists polled by Reuters had expected retail sales to rise 0.5 percent last month after a previously reported 0.1 percent gain in January.

So-called core sales, which strip out automobiles, gasoline and building materials and correspond most closely with the consumer spending component of gross domestic product, rose 0.4 percent after advancing 0.3 percent in January.

U.S. stock index futures erased earlier losses, while prices for Treasury debt fell. The dollar rose against the yen and extended gains versus the euro.

The retail sales data was the latest to suggest momentum in the economy as fiscal policy tightened, marked by the end of a 2 percent payroll tax cut and an increase in tax rates for wealthy Americans on January 1.

via Reuters

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