WASHINGTON – US consumers increased their spending slightly in February following a significant decline the previous month. This indicates a more cautious approach to shopping as worries about the economy loom.
Retail sales in February showed a modest uptick of 0.2%, bouncing back from a notable 1.2% decrease in January, reported by the Commerce Department on Monday. The rise in sales was seen in grocery stores, home and garden outlets, and online retailers, while sales dropped at car dealerships, eateries, and electronics shops.
This marginal growth implies that Americans might be growing more hesitant about their spending habits due to the recent stock market volatility and the uncertainty stemming from President Donald Trump’s trade tariff proposals and government budget cuts.
On Friday, a measure of consumer sentiment fell sharply for the third straight month and is now down more than 20% since December. Respondents to the University of Michigan’s survey cited policy uncertainty as a leading reason for the gloomier outlook. While the respondents were divided sharply by party — sentiment about the current economy fell among Republican by much less than for Democrats — Republicans’ confidence in the economy’s future dropped 10%.
Sales also fell last month at gas stations, clothing stores, and sporting goods stores. The figures aren’t adjusted for prices, and the cost of gas also declined in February, which likely accounts for most of the drop. Excluding gas and autos, retail sales rose 0.5%, a healthier figure but still modest after a plunge of 0.8% in January.
Hiring has mostly held up and there are no signs that companies are laying off workers. As long as Americans have jobs spending will likely show signs of resilience.
Still, consumers from all income levels are feeling more strained, according to a slew of earnings reports over the past few weeks from major retailers including Walmart, Macy’s and Dollar General.
Walmart, the nation’s largest retailer and a bellwether for the retail sector, released a weak outlook last month citing uncertainty around tariffs.
Dollar General CEO Todd Vasos told indusgtry analysts on Thursday that he doesn’t expect any improvement in the macro-environment, particularly for the chain’s core customers.
“Our customers continue to report that their financial situation has worsened over the last year as they have been negatively impacted by ongoing inflation ” Vasos said during an earnings call. “Many of our customers report that they only have enough money for basic essentials, with some noting that they have had to sacrifice even on the necessities.”
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D’Innocenzio reported from New York.
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