US consumer spending rises only slightly amid economic worries

Consumer spending in the United States saw a slight uptick in February, following a notable decrease the previous month. This modest increase in retail sales by 0.2% was reported by the Commerce Department on Monday. While sales in certain sectors like grocery stores, home and garden stores, and online retailers experienced growth, others such as automotive dealers, restaurants, and electronics stores saw a decline.

The recent numbers suggest that consumers are displaying more caution in their spending habits amid mounting concerns about the economy’s trajectory. The uncertainties stemming from the stock market fluctuations, President Donald Trump’s tariff threats, and government spending cuts have contributed to an overall sense of unease among both consumers and businesses.

Despite the slight recovery in retail sales, economists remain cautious about the outlook for consumer spending. Many anticipate that consumer spending will stagnate, growing only between 1% to 1.5% in the first quarter of this year. This rate is significantly lower compared to the 4.2% increase observed in the final quarter of the previous year, indicating a potential slowdown in consumer activity.

The University of Michigan’s consumer sentiment index also took a hit, dropping for the third consecutive month, reflecting a decline of more than 20% since December. Survey respondents pointed to policy uncertainties as a key factor contributing to their pessimistic outlook. While there was a clear partisan divide in sentiment, with Republicans showing more confidence in the current economy than Democrats, there was a noticeable drop in Republicans’ optimism regarding the future economic landscape.

Major retailers like Walmart, Macy’s, and Dollar General have all reported decreased sales and expressed concerns about the prevailing economic uncertainties. Walmart, in particular, issued a cautious forecast citing apprehensions around tariffs. Additionally, the National Association of Homebuilders reported a decline in builder sentiment due to economic uncertainty and rising construction costs.

The broader economic outlook remains mixed, with companies like Dollar General considering store closures in response to the challenging economic environment. Despite a relatively stable job market, consumer spending patterns indicate a shift towards essential purchases rather than discretionary spending. This trend is exemplified by changes in shopping behavior at retailers like Costco, with customers opting for more affordable food options amid economic concerns.

The overall sentiment among retailers and consumers reflects growing anxiety and uncertainty surrounding the economy. Factors such as inflation, tariffs, and government policies have contributed to a sense of unease among consumers of varying income levels. While the full impact of these economic headwinds remains to be seen, it is evident that Americans are adopting a more cautious approach to their spending habits in light of the prevailing economic uncertainties.