By Sabrina Escobar
Retail sales notched a monthly gain in February, but came in lower than anticipated.
The Census Bureau said Monday that retail sales rose 0.2% in February from January. The consensus forecast among analysts tracked by FactSet was for an increase of 0.7%.
The change in January sales was revised down to a 1.2% monthly decrease from a 0.9% decline, suggesting that the pullback in spending observed early in the year was bigger than previously projected.
Sales rose 3.1% on an annual basis.
Sales in only five of the 13 categories tracked by the Census Bureau rose from their January levels in February: nonstore retailers, a proxy for e-commerce; general merchandise; health and personal care; food and beverages; and building materials. These categories lean toward essential products rather than discretionary ones, so the gains in those areas indicate that consumers were cautious about their outlays last month.
Retailers have warned that February got off to a soft start, thanks to a combination of cold weather, delayed tax refunds, and a growing sense of uncertainty among consumers about the economy. Since January, consumer sentiment has notched three consecutive months of declines as Americans try to navigate the Trump administration's shifting policies, from on-again, off-again tariffs to widespread job cuts in the federal government.
"Frequent gyrations in economic policies make it very difficult for consumers to plan for the future, regardless of one's policy preferences, " said Joanne Hsu, director of consumer surveys at the University of Michigan, in a release Friday.
Sentiment and spending haven't correlated strongly in recent years, but 2025 may be closing the gap. Bank of America's aggregated credit and debit card data indicate spending per household fell 2.3% year over year last month, compared with a 1.9% increase in January. Seasonally adjusted spending rose 0.3% month over month.
A significant pullback in spending would be a worrisome sign for the U.S. economy. Consumers have been the driving force behind gross domestic product growth in the postpandemic years, so investors are closely tracking any signs of a sustained deceleration -- and whether it could lead to a broader downturn.
Gisela Hoxha, an economist at Citi, cautioned ahead of the report that recent volatility in retail sales means it is "important to average through a few months of data to get a sense of the underlying trend."
Write to Sabrina Escobar at sabrina.escobar@barrons.com
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March 17, 2025 09:12 ET (13:12 GMT)
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