Athira Sethu
Kochi, 18 March 2025
In February, U.S. retail sales made a modest improvement, but consumers continued to reduce non-essential purchases. This underscored increasing uncertainty in the economy, with a tariff war and mass firings of federal workers contributing to the unease.
The U.S. Commerce Department, meanwhile, said in a report that the economy remained growing, but at a reduced rate. The report depicted worrisome consumers, with restaurant and bar sales declining by the most in more than a year.
Retail sales rose by 0.2% during February following a sharp fall of 1.2% during January. A 0.6% increase was what the economists had forecast, but there were various reasons why sales were affected, including winter storms and wildfires. Despite this, online stores reported an increase in sales by 3.1% compared to last year.
Sales in health and personal care stores increased by 1.7%, and building materials and lawn equipment sales increased by 0.2%. Auto sales decreased by 0.4%, however, and clothing and electronics sales also decreased. The food services industry experienced its largest decline in more than a year, and decreased gasoline prices led to a 1% decline in sales at service stations.
Even though there was a minimal rise in sales at retail levels, consumer mood dropped to about a 2.5-year low level in March. Concerns surrounding inflation, the security of employment, and how tariffs will have an effect can influence future expenses. Big brands such as Macy’s, Walmart, Kohl’s, and Target have already lowered their forecasts for sales considering inflation and possible recession fears.
Economists are forecasting that consumer spending will decelerate, with some estimating growth as low as 1.2% for the quarter. The Federal Reserve is likely to maintain interest rates unchanged, but with increasing fears of inflation and economic slowdown, it could reduce rates later this year.
All in all, the economy is struggling and, although retail sales continue to rise, indicators of consumer stress are emerging more clearly. Many economists think the economy will continue to slow and some even mention the risk of a recession.
