US shoppers increased spending tepidly in February 2025 as anxiety over the economy rises

A shopper passes by a display of large-screen televisions in a Costco warehouse in east Denver. US retail sales rose marginally in February 2025. (AP Photo/David Zalubowski)

WASHINGTON — US shoppers stepped up their spending a just bit in February after a sharp pullback the previous month, signaling that Americans are shopping more cautiously as concerns about the direction of the economy mount.

Retail sales rose just 0.2 percent in February, a small rebound after a sharp drop of 1.2 percent in January, the Commerce Department said Monday. Sales rose at grocery stores, home and garden stores, and online retailers. Sales fell at auto dealers, restaurants, and electronics stores.

The small increase suggests Americans may be growing more wary about spending as the stock market has plunged and President Donald Trump’s tariff threats and government spending cuts have led to widespread uncertainty among consumers and businesses.

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On Friday, a measure of consumer sentiment fell sharply for the third straight month and is now down more than 20 percent since December.

Respondents to the University of Michigan’s survey cited policy uncertainty as a leading reason for the gloomier outlook.

While the respondents were divided sharply by party — sentiment about the current economy fell among Republican by much less than for Democrats — Republicans’ confidence in the economy’s future dropped 10 percent.

Sales also fell last month at gas stations, clothing stores, and sporting goods stores.

The figures aren’t adjusted for prices, and the cost of gas also declined in February, which likely accounts for most of the drop.

Excluding gas and autos, retail sales rose 0.5 percent, a healthier figure but still modest after a plunge of 0.8 percent in January.

Hiring has mostly held up and there are no signs that companies are laying off workers. As long as Americans have jobs spending will likely show signs of resilience.

Still, consumers from all income levels are feeling more strained, according to a slew of earnings reports over the past few weeks from major retailers including Walmart, Macy’s and Dollar General.

Walmart, the nation’s largest retailer and a bellwether for the retail sector, released a weak outlook last month citing uncertainty around tariffs.

Dollar General CEO Todd Vasos told industry analysts on Thursday that he doesn’t expect any improvement in the macro-environment, particularly for the chain’s core customers.

“Our customers continue to report that their financial situation has worsened over the last year as they have been negatively impacted by ongoing inflation ” Vasos said during an earnings call. “Many of our customers report that they only have enough money for basic essentials, with some noting that they have had to sacrifice even on the necessities.”