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February Retail Sales Inch Up 0.1%, Weaker Than Expected

Sales at the nation's retailers edged up by 0.1% in February as bad winter weather in many parts of the country kept shoppers away from the malls.

The tiny increase reported by the Commerce Department on Tuesday came after retail sales were flat in January as shoppers took a breather after buying briskly during the holidays.

Shoppers in February cut spending on a wide range of goods, including home furnishings, building and garden supplies, clothing, electronics and appliances, and sporting goods, books and music. They also ate out less.

A bright spot was auto sales, which went up by 0.9% in February. That followed a decrease of the same size in the previous month.

The latest retail figures were weaker than economists were forecasting. They expected sales would go up by 0.3%.

Excluding auto sales, which can swing widely from month to month, sales at all other merchants in February actually dipped by 0.1%, the worst performance since October. Economists were predicting a better showing--a 0.3% rise--in this category in February.

Consumer spending plays a major role in shaping overall economic activity, and therefore is closely watched by economists.

The economy has been going through a spell of sluggish growth, reflecting the strain from the housing slump and the ailing automotive industry. Still, economists are hopeful consumers will keep spending at a sufficient pace to keep the economy expanding and avoid falling into a recession.

The reason for this optimism is because the job market still remains in good shape and paychecks are growing at a faster pace than inflation. That leaves people with extra money to spend on other things.

Yet, there are risks that consumers could clamp down if the housing slump were to get even worse. Gas prices, meanwhile, are rising again. An unanticipated jolt in energy prices also could be jarring to consumers, as well as to the overall economy.

The performance of retail sales in January and February suggest the first quarter of this year got off to a lackluster start.

The Federal Reserve, which had boosted interest rates steadily for two years to thwart inflation, has left rates alone since August. Many economists predict the Fed will hold rates steady again when it meets next week. The Fed's goal is to slow the economy enough to fend off inflation but not so much as to cripple economic activity.

The retail report showed that sales at home furnishings stores fell 1.7%, the most since August 2004. A 1.2% drop in sales at bars and restaurants was the largest since September 2003.

Sales at building and garden supply shops declined by 1.4%. Clothing stores sales fell 1.8%. Sales at sproting goods, hobby, book and music stores dropped 0.8%.

Those declines, however, were blunted by stronger sales elsewhere, including auto dealers, food stores and electronic and mail-order firms.

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