Consumers spent at a slower pace than expected in February, but the underlying measurements show sales still rising at a solid pace despite concerns about slowing the economy and rising inflation.
Retail sales rose 0.2% that month, according to the Commerce division’s Advanced Reading on Monday. Excluding cars, the increase was 0.3%, which was in line with expectations.
Sales numbers are adjusted to seasonal factors, but not to inflation. Prices rose 0.2% that month, according to a previous report from the Ministry of Labor.
The so-called control group removed the non-core sector and fed directly to gross domestic product calculations, up 1% more than expected.
Stocks that reached revised levels last week were higher, following the report. The longer Treasury yields rose slightly.
“It’s not a great report, but despite how pessimistic consumers exist for the future, they are still in positive territory,” said Robert Frick, corporate economist for the Navy Federal Credit Union. “However, the main driver of consumer spending is consumer income, which has grown at a good rate and has made an impressive leap in January.”
Online spending helped increase sales that month, with non-store retailers reporting an increase of 2.4%. Health and personal care showed an increase of 1.7%, while restaurants increased by 0.4%.
On the downside, bars and restaurants reported a 1.5% decline, while gas stations fell 1% amid declining prices at pumps.
It was an increase of 3.1% year-on-year, better than the 2.8% inflation rate measured by the Consumer Price Index.
Another downbeat note from the report was a sudden revision in January, but originally reported as a 0.9% decline.
The release comes amid growing concerns about economic growth, particularly as President Donald Trump is engaged in an aggressive tariff war with major US trading partners. Economists are worried that tariffs will drive inflation and slow the economy.
“Consumers and businesses are expected to draw back spending if they are unable to make informed decisions about the future of the economy and their status within it,” said Elizabeth Rental, senior economist at personal finance site Nerdwallet. “Currently, direct economic policies and broad federal policies with indirect economic impacts are fluid and make informed decisions difficult.”
Some metrics, such as the GDPNOW tracker in the Atlanta Federal Reserve Economic Data, show that growth could be negative in the first quarter, but solid reads on control retail sales could rise later on Monday.
Other economic news on Monday showed that New York federal government’s measures of factory activity in the area recorded an unexpectedly sharp decline in March.
Empire State Manufacturing Survey posted a -20 reading that month, representing the difference between companies seeing an expansion against contraction. This number was down from the 5.7 level in February, well below the -1.8 estimate.
New orders posted a sharp slide with the index falling 26.3 points to -14.9. Shipping was also significantly reduced. Regarding inflation, the index of prices paid and received also rose.
Corrected: The new order index fell to -14.9, down 26.3 points. Previous versions have misrepresented the movement.
