A report from the Census Bureau reveals that retail spending increased by 0.2% in February, falling short of Dow Jones’s prediction of a 0.6% increase.
The report comes as consumers brace for President Donald Trump’s tariffs, which have raised concerns that they will drive up inflation and cause the economy to slow down.
“Not a great report, but one still in positive territory despite how pessimistic consumers are about the future,” Navy Federal Credit Union corporate economist Robert Frick told CNBC. “But the main factor in consumer spending is consumer income, and that’s growing at a good rate and had an impressive leap in January.”
In January, retail spending dropped 1.2%, but economists mostly attribute this decline to bad weather and a postholiday lull.
“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, wrote in an email to CBS.
“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.
In March, consumer sentiment dropped to a 2 1/2-year low of 57.9% from 64.7%.
The drop comes as Trump implemented a 25% tariff on all goods from neighboring Mexico and Canada, leading the two countries to slap retaliatory tariffs against the United States.
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The control group, which excludes noncore sectors and is included in gross domestic production calculations, rose by 1%.
Retail sales are outpacing inflation as sales overall increased by 3.1% on a year-over-year basis and the consumer price index inflation rate increased by 2.8%.
