Retail Sales Rose Less Than Expected In February

Consumer spending, the main engine powering the U.S. economy, is still running but showing signs of sputtering in the first few months of the year. 

Retail sales rose 0.2% in February from January, bouncing back slightly after dropping a downwardly revised 1.2% the month before, the Census Bureau said Monday. That was less than the 0.6% monthly growth forecasters had expected, according to a survey of economists by Dow Jones Newswires and The Wall Street Journal.

Financial markets have taken a beating in recent weeks as Trump has threatened to impose high tariffs on trading partners, potentially pushing up consumer prices and raising concerns that the economy could fall into a recession. Consumer confidence surveys have shown that the public is bracing for higher inflation and a tougher job market ahead.

Monday’s retail sales data suggests people are tightening their belts where they can, cutting some unnecessary expenses. A major sign of this trend in Monday’s report was a 1.5% drop in sales at food and drinking places.

“Consumers are pulling back on discretionary spending amid concerns over tariffs, declines in the equity market and slowing economic growth,” Kathy Bostjancic, chief economist at Nationwide, wrote in a commentary.

A 0.4% decline in auto sales and a 1.7% drop in department store sales were offset by a 2.4% increase in online store sales. Sales at gas stations fell 1%, likely representing a drop in gas prices because the report is not adjusted for inflation.

Despite the downward revision of January’s figures and the growth falling short of expectations, the overall increase in sales suggested consumers still have enough money and are willing to spend it. That means the economy is probably not in a recession, at least not yet, Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics, wrote in a commentary.

“Fears that recession is already underway … look overdone,” Tombs wrote.