“Claman Countdown” panelists Gary Cartbaum and Jeffsika discuss the performance and consumer sentiment of retail stocks.
Retail sales in the US rebounded in February, suggesting that the economy continued to grow in the first quarter, but continued to grow at a moderate pace as it focuses on tariffs and sentiment on federal workers' imports and mass shootings.
Retail sales rose 0.2% last month after a revised 1.2% decline in January, the Commerce Department's Census Bureau said Monday. The economists voted by Reuters predict retail sales, mostly products and not adjusting for inflation, moving forward 0.6% after a previously reported 0.9% decline in January.
That decline rose significantly in the fourth quarter, followed by winter storms and California wildfires in many parts of the country in January.
Inflation slowed slightly in February, slowing to 2.8% ahead of the Federal Reserve meeting
The woman is looking at beauty products at a local store in New York City on December 10th, 2023. (Reuters//Eduard Munoz/Reuters)
However, as consumer sentiment fell to near 2-1/2 years' lows in March, it is unlikely that the momentum will last.
Unleashing the trade war, President Donald Trump's tariffs sparked concerns about inflation, loss of employment and income, and developments that could undermine consumer spending. Large layoffs, part of an unprecedented campaign by the Trump administration, have also been seen hurting spending.
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Bank of America's card data showed early signs of softening discretionary spending such as restaurants in the Washington, DC Metropolitan area, which includes parts of Maryland and Virginia. Stock market selling could curb spending driven primarily by high-income households, while rising food prices could narrow down low-income households.
Treasury Secretary Scott Bescent said earlier this month that the economy could slow down as it shifts from public spending to more private spending, calling it a “detox period.”
US Treasury Secretary Scott Bescent will speak at the New York Economic Club (ECNY) event held in New York on March 6, 2025. (Victor J. Blue/Bloomberg via Getty Images)
Retail sales, excluding automobiles, gasoline, building materials and foodservice, fell 1.0% in January, then rose 1.0% in February. These so-called core retail sales correspond most closely to the consumer spending component of gross domestic product.
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Economists had forecast a core retail sales of 0.3% after a previously reported 0.8% decline in January. They expect consumer spending to be significantly slower in the first quarter of a robust four-quarter with a robust 4.2% annual rate for the October-December quarter.
Retail sales, excluding automobiles, gasoline, building materials and foodservice, fell 1.0% in January, then rose 1.0% in February. (DavidDeeDelgado / Getty Images) / Getty Images)
The Atlanta Federal Reserve is currently forecasting GDP contracts at a 2.4% pace. However, estimates for most economists have converged to a growth rate of 1.2% this quarter. The economy grew at a 2.3% pace in the fourth quarter.
