More jobs, so more spending at stores

WASHINGTON - Thanks to solid job creation, Americans spent more at retailers in February despite smaller paychecks. The surprisingly strong increase helped allay fears that higher Social Security taxes and gasoline prices might chill spending early this year.

Much of the increase in February retail sales compared with January reflected the higher gas prices. But even excluding the volatile categories of gas, autos, and building supply stores, so-called core retail sales rose strongly.

Economists were encouraged by the healthier-than-expected numbers from the Commerce Department on Wednesday. Afterward, some revised their estimates of U.S. economic growth for the January-March quarter.

Americans increased their overall retail spending 1.1 percent last month over January, the department said.

Core sales rose 0.4 percent. And the government revised up its January figures to show that core sales rose 0.3 percent from December, better than its initial estimate of 0.1 percent.

Over the last 12 months, retail sales have risen 4.6 percent - far more than consumer inflation, less than 2 percent over that time.

The retail sales report is the government's first look each month at consumer spending, which drives about 70 percent of economic activity.

The retail sales figures and a separate report that U.S. companies increased their restocking in January led Barclays to raise its estimate of growth in the first quarter by nearly a full percentage point to an annual rate of 2.5 percent. That would be a leap from the scant 0.1 percent annual growth rate in the October-December quarter.

Auto sales jumped 1.1 percent last month, the sharpest gain since December. Sales at gas stations surged 5 percent, the most since a 6 percent increase in August.

Sales at general merchandise stores, which include major department and discount stores, rose 0.5 percent in February. But the department store category as a whole fell 1 percent.

Reports from retailers suggest that companies that cater to lower- and middle-income shoppers are struggling more than others.