Retail sales fell in February, notching their third straight decline, along with downward revisions to January’s sales. Headline sales were down 0.6% in February, following declines of 0.8% and 0.9% in January and December, respectively. Upon adjusting for volatile car, gas, and building materials sectors, “control” sales were down 0.1%, following a 0.1% decline in January and no change in December. (See chart.) The declines in headline sales were clearly exacerbated by falling gasoline prices. Also, the softness in control sales over the last three months comes on the heels of rapid sales growth over the preceding three months. Finally, it should be added that severe winter weather in the Northeast also probably restrained sales. So, a focus on only the last three months’ data overstates recent weakness in sales. Still, the weather didn’t keep people home from work, as last week’s jobs data indicate, so it is hard to see how it could have been a huge drag on sales. A more accurate depiction of things is probably that the US economy remains mired in a three steps forward, two (or three?) steps backward pattern. Job growth and homebuilding are proceeding nicely, but consumer spending (retail sales) has lost its luster, and there also has been recent softness in capital spending and exports. All in all, we feel comfortable with the 2.0%-2.5% US GDP forecast we have been holding to. In terms of individual store types, the biggest sales declines in February were in motor vehicles (-2.6%), building materials (-2.3%), and department stores (-1.4%). Electronics stores saw a 1.2% drop in February, for a total decline of 5.6% from (elevated) September sales levels. In a slight about face, gas station sales were up 1.5% in February, following declines of 16.5% over the previous two months and 23.0% over the last 12 months.