Retail sales barely ticked up in February amid confusion and worry over on-and-off tariffs and ongoing inflation.
Sales rose 0.2 percent last month, the Commerce Department said Monday, falling short of expectations after a revised 1.2% decline in retail sales the previous month. A large part of the overall increase in sales was concentrated in pharmacies and online retailers. Sales increased by 1.7% and 2.4% respectively in those two sectors over the past two months.
Otherwise, sales either rose weakly or fell across industries. Sporting goods stores have seen a decline over the past two months and restaurants and beverage stores have seen a general decline since November.
Although it is encouraging to see retail sales go up in February, the minuscule monthly increase was not the bump people were expecting after the sharpest decline to start the year off since retail sales were recorded by the United States Census Bureau.
With Trump continuing to escalate threats of tariffs on the rest of the world on top of current tariffs on steel, aluminum and automobiles among other things, anxieties over a an impending trade war have soared. Uncertainty over what the economic future holds and where inflation will stand in the coming months have seemed to have a chilling effect on people’s spending habits.
Despite the tepid comeback in the report, some businesses are not panicking over the current state of both the country and economy.
“So far, I haven’t seen any direct effect on my business,” said Kyle Brittell, store manager of a Pet Supplies Plus store in Rome, New York, in reference to the impending trade war. In fact, sales have been up over the last couple weeks for Brittell’s store.
However, Brittell did acknowledge the prices of imported goods are certainly at risk of a price increase.
“Most of our products are produced within the United States – close to 70, 80% of what we carry. But that 20% is probably going to be subject to some type of price increase.” said Brittell. “I’ve seen some people start to look into possibly switching to some more American made products.”
Consumers are quite concerned about the direction of the economy two months into Donald Trump’s second term as president. Consumer sentiment dropped by 10% from the previous month in February according to a survey of consumers conducted by the University of Michigan.
Such feelings were also expressed by customers at Pet Supplies Plus as many have expressed worry “about whether or not they’re going to see a rise in prices” as a result of tariffs on Canada, Mexico and other countries according to Brittell.
With an uncertain future ahead, many consumers are exercising caution with their wallets. Disposable personal income increased by 0.9% in the beginning of the year yet personal expenditures were down in the same month.
The decrease in sales in industries like food services, hobby and sporting goods, clothing and electronics coupled with a sizable increase in health retailers sales suggests people are cutting back on spending their disposable income on nonessential goods and prioritizing necessities.
Not only is unpredictability a reality affecting regular people but is also impacting businesses as well. The seemingly incoherent tariff rollout has made some owners confused as to how their operation will be affected if at all.
“I don’t really know what avenue my suppliers use that come from these countries that are going to be imposed with tariffs. Price increases might happen and I’m just not aware of it,” said Jenna Boice, the owner of Oneida Office Supply in Oneida, New York.
However, as someone who tries to source locally as much as possible to insulate her business from external international affairs, she is more insulated by tariffs than other small and large businesses and who will “feel it [the tariffs] a little bit differently than we do.”