Retail Sales in the United States increased by 0.2% in February, amounting to $722.7 billion. This followed a 1.2% decline in January and fell short of the anticipated 0.7% rise, while annual growth was recorded at 3.1%.
Retail trade sales rose by 0.5% compared to January 2025, and were up 3.4% from the same period last year. In the three months from December 2024 to February 2025, total sales grew by 3.8% year-on-year.
Market Response And Consumer Spending
The market response to this data was minimal, with the US Dollar Index showing a decrease of 0.15% at 103.58.
That slight rise in retail sales last month, after a steep drop in January, highlights an uneven trend in consumer spending. A 0.2% increase is nowhere near what forecasters had expected, meaning households are still being cautious. Over the past year, sales grew by 3.1%, which, while not terrible, leaves questions about how strong consumer demand really is. When looking at the broader picture—the three-month period ending in February—the figures paint a slightly better picture, with retail rising 3.8% on an annual basis.
Breaking it down further, retail trade, which excludes food services, saw a 0.5% bump from the previous month and grew 3.4% year-on-year. This tells us that outside of restaurants and bars, spending wasn’t as sluggish. The fact that January had a steep 1.2% drop suggests seasonal factors were at play. Whether this rebound continues is key.
Market reaction was subdued, which shows that traders were not caught off guard. The Dollar Index dipped by just 0.15% to 103.58, suggesting that this data didn’t alter expectations for the Federal Reserve’s direction. If the trend of weaker-than-anticipated spending continues, that could add further weight to arguments for rate cuts sooner rather than later.
Future Economic Indicators To Monitor
Those involved in short-term funding rates and interest rate derivatives should watch how upcoming economic indicators build on this. If sales remain soft or slow further, markets may begin adjusting rate expectations more aggressively. However, if spending bounces back in March, the idea of rapid rate adjustments could fade.
Keeping an eye on upcoming consumer sentiment reports may provide additional clarity. If confidence remains shaky, it could mean households are pulling back more than expected. That would align with this sales miss and could start changing views on how resilient demand actually is.
