NRF Chief Economist: Consumer fundamentals remain healthy

WASHINGTON – Data released Monday by the U.S. Census Bureau indicated modest month-over-month growth in retail sales for February, as consumers expressed concerns about inflation and policy decisions made in Washington, according to National Retail Federation Chief Economist Jack Kleinhenz.

“Lower-than-expected consumer spending in the first couple of months of the year likely reflected payback for very strong spending in the fourth quarter and weather-related events since then,” Kleinhenz said. “Moreover, these results show that households are apprehensive and carefully navigating lingering inflation and turmoil related to changing economic policies. Regardless of the softer spending, consumer fundamentals remain healthy and intact so far, supported by low unemployment, steady income growth and other household finances. American shoppers will likely continue to spend as long as unemployment remains low and job growth continues.”

The Census Bureau said overall retail sales in February were up 0.2% seasonally adjusted month over month and up 3.1% unadjusted year over year. That compared with a decrease of 1.2% month over month and an increase of 3.9% year over year in January.

February’s core retail sales as defined by NRF — based on the Census data but excluding automobile dealers, gasoline stations and restaurants — were up 0.9% seasonally adjusted month over month but down 0.2% unadjusted year over year because of the comparison against unusually high sales in February 2024. Core sales were down 1.2% year over year on a three-month moving average, also skewed by last February.

The results come after core retail sales grew 4.2% year over year during the 2024 holiday season and 3.6% for the full year.

Last week, the CNBC/NRF Retail Monitor, powered by Affinity Solutions, reported that core retail sales were down 0.22% seasonally adjusted month over month in February but up 4.11% unadjusted year over year. That compared with a decrease of 1.27% month over month and an increase of 5.72% year over year in January.