Retail sales across the U.S. rose a modest 0.2% in February, missing forecasts amid fears that the economy is slowing, new government data shows.
A number of major retailers have warned recently that Americans are paring back on spending. Consumer spending accounts for roughly two-thirds of economic activity. Sales in January were also revised down, according to the figures released Monday.
“Many observers were disappointed in January’s retail sales figures, and February’s numbers contribute to the ‘economic growth is slowing’ narrative,” Ted Rossman, senior industry analyst with Bankrate, said in an email.
“Consumer confidence has taken a big hit in recent weeks, due mostly to concerns about tariffs on top of already elevated prices, and we’re seeing increasing evidence that consumers are pulling back,” he added.
Last week, consumer sentiment dropped to a two-year low on concerns about economic growth, according to a gauge released by the University of Michigan. Experts say the Trump administration’s move to impose steep new tariffs on key U.S. trading partners has heightened uncertainty for consumers and businesses, while also spooking investors.
The latest retail sales numbers point to “increased spending reluctance on the part of the consumers as flagging consumer sentiment, rising job insecurity and another bout of cold winter weather took a toll on households’ willingness to spend,” EY Senior Economist Lydia Boussour said in a report. “Aside from the strong increase online and at personal care stores, sales were mixed across retailers and the largest decline in sales at restaurants and bars in two years suggests consumers are cutting back on non-essential expenses.”
American retailers Kohl’s, Dick’s, Walmart and others have warned that they expect consumers to spend more cautiously this year, while airlines, including Delta, American and United cut their earnings forecasts this month amid similar concerns of an economic slowdown.
Although retailers reported weaker revenue last month than economists had projected, most of the shortfall stemmed from a dip in car sales and lower fuel costs. Sales in other categories were more in line with forecasts, reassuring investors that the economy isn’t already slipping into a recession.
Leading stock indexes edged up in early trade Monday, with the S&P 500 and Dow Jones Industrial Average each up 0.2%. The Nasdaq Composite rose 0.1%.
