U.S. retail sales in February edged up by 0.2% as consumers pulled back on discretionary spending, signaling cautious optimism amid a broader economic backdrop marked by tariffs and federal workforce cuts.
The Commerce Department’s Census Bureau report on Monday painted a mixed picture: while overall retail activity improved slightly, spending at restaurants and bars fell, reflecting more guarded consumer behavior.
"This report should alleviate concerns that the economy already is shrinking," said Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics. However, he warned that the risk of much weaker growth remains elevated, as consumers might seek to rebuild their savings in response to uncertainties over job security.
The report indicated that retail sales, which largely reflect goods and are not adjusted for inflation, rose by 0.2% in February. This modest rebound followed a downwardly revised 1.2% decline in January—a period marked by robust fourth-quarter gains and weather disruptions including winter storms and wildfires in California. Year-on-year, sales increased by 3.1%, bolstered by a 2.4% jump in online store receipts and a 1.7% rise at health and personal care outlets.
However, the gains were not uniform across sectors. Sales at building material and garden equipment suppliers increased by 0.2%, while auto dealership receipts fell 0.4% after a steep 3.7% drop in January. Furniture store sales remained flat, clothing store receipts dipped 0.6%, and electronic retailers saw a 0.3% decline. The services segment fared worse; food services and drinking places registered a 1.5% drop, and lower gasoline prices contributed to a 1.0% decrease in sales at service stations.
Discretionary spending appears to be softening. Bank of America card data for the Washington, D.C. metropolitan area—encompassing parts of Maryland and Virginia—showed early signs of reduced spending at restaurants. With consumer sentiment sinking to a near 2-1/2-year low in March, many analysts expect that consumer spending could weaken further in the coming months.
Economic headwinds also loom from President Donald Trump’s tariffs, which have sparked a trade war, and from mass layoffs of public workers as the Trump administration pursues a campaign to shrink the federal workforce. Retailers such as Kohl's, Macy's, Walmart, and Target have already tempered their sales expectations amid mounting inflation and recession fears.
On the monetary policy front, U.S. Treasury yields rose while the dollar slipped against a basket of currencies. Federal Reserve officials, meeting later this week, are expected to keep the overnight interest rate in the 4.25%-4.50% range. The Fed has trimmed rates by 100 basis points since September, and financial markets anticipate that the central bank may resume cutting borrowing costs in June, following a pause in its easing cycle that began in January.
Looking at the core retail segment—excluding volatile categories such as automobiles, gasoline, building materials, and food services—sales rose by 1.0% in February after a revised 1.0% decline in January. These core sales are closely linked to consumer spending in gross domestic product calculations, and economists had forecast a rebound of 0.3% following a previously reported 0.8% drop in January. Despite the modest gains, expectations are that consumer spending will slow significantly in the first quarter compared to the robust 4.2% annualized growth observed in the fourth quarter, when the economy expanded at a 2.3% pace.
The Atlanta Federal Reserve forecasts GDP could contract by 2.4% this quarter, although most economists are converging on a growth rate of around 1.2%. As the economy navigates these challenges, the underlying trend in retail sales appears firm, even as cautious consumers adjust their spending in response to an uncertain economic landscape.
In response to President Donald Trump's sweeping new tariffs, a number of global companies are eyeing expansion into the United States to minimize the economic fallout from the trade measures.
Russian Foreign Minister Sergey Lavrov extended Moscow’s support for the ongoing indirect nuclear talks between the United States and Iran, offering to mediate or assist in any way that would be beneficial to Tehran and acceptable to Washington.
Japanese Finance Minister Katsunobu Kato strongly denied accusations that Japan manipulates its currency to weaken the yen, ahead of a highly anticipated meeting with U.S. Treasury Secretary Scott Bessent next week. Kato addressed the issue in the Japanese parliament on Friday, reaffirming that Jap
The number of Americans filing first-time unemployment claims decreased by 9,000 last week, falling to 215,000, according to data from the US Labor Department released on Thursday.
U.S. President Donald Trump's desire to influence the yen's exchange rate in the ongoing trade negotiations with Japan is likely to create challenges for both nations, analysts warned.
A mob attack on an Ahmadi place of worship in Karachi has left one man dead, highlighting ongoing persecution of the minority group.
A Russian court has sentenced 19-year-old Darya Kozyreva to nearly three years in prison for protesting the war in Ukraine using poetry and graffiti.
The new U.S. ambassador to Japan has called for closer military coordination with Tokyo, framing the alliance as crucial amid rising regional tensions and ongoing trade disputes.
Students in Serbia have rallied outside a police station as Belgrade University’s rector is questioned over support for anti-government protests.
OpenAI has unveiled a new option called Flex processing, an API service designed to provide more affordable AI model usage in exchange for slower response times and occasional resource unavailability.
The Russian ruble has emerged as the top-performing currency globally in 2025, registering an impressive 38% appreciation against the US dollar since the beginning of the year, according to a report by Bloomberg.
A small plane crashed near Kopake, New York, on April 13, killing at 6 people. The Mitsubishi MU-2B aircraft, carrying six people, went down under unclear circumstances. This marks the second aviation accident in New York in a week, raising safety concerns.
Several regions in Ukraine faced heightened alert on Palm Sunday, as reports of explosions and missile threats drew public attention and official responses.
Severe rainfall on April 17 led to flooding and landslides in the Piedmont region, prompting a large-scale emergency response from over 400 firefighters.
Start your day informed with AnewZ Morning Brief: here are the top news stories for April 16th, covering the latest developments you need to know.
A mob attack on an Ahmadi place of worship in Karachi has left one man dead, highlighting ongoing persecution of the minority group.
A Russian court has sentenced 19-year-old Darya Kozyreva to nearly three years in prison for protesting the war in Ukraine using poetry and graffiti.
The new U.S. ambassador to Japan has called for closer military coordination with Tokyo, framing the alliance as crucial amid rising regional tensions and ongoing trade disputes.
Students in Serbia have rallied outside a police station as Belgrade University’s rector is questioned over support for anti-government protests.
Russian Foreign Minister Sergey Lavrov extended Moscow’s support for the ongoing indirect nuclear talks between the United States and Iran, offering to mediate or assist in any way that would be beneficial to Tehran and acceptable to Washington.
A mob attack on an Ahmadi place of worship in Karachi has left one man dead, highlighting ongoing persecution of the minority group.
A Russian court has sentenced 19-year-old Darya Kozyreva to nearly three years in prison for protesting the war in Ukraine using poetry and graffiti.
The new U.S. ambassador to Japan has called for closer military coordination with Tokyo, framing the alliance as crucial amid rising regional tensions and ongoing trade disputes.
Students in Serbia have rallied outside a police station as Belgrade University’s rector is questioned over support for anti-government protests.
OpenAI has unveiled a new option called Flex processing, an API service designed to provide more affordable AI model usage in exchange for slower response times and occasional resource unavailability.
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