More Signs of Spending Slowdown

A pair of economic barometers show that consumer worries are on the rise for a variety of reasons, including ongoing concerns about inflation and the impact of policy decisions made by the federal government. On the one hand, the latest data from the U.S. Census Bureau showed modest month-over-month retail sales growth in February, which “likely reflected payback for very strong spending in the fourth quarter and weather-related events since then,” said National Retail Federation Chief Economist Jack Kleinhenz.

“Moreover, these results show that households are apprehensive and carefully navigating lingering inflation and turmoil related to changing economic policies,” said the economist. “Regardless of the softer spending, consumer fundamentals remain healthy and intact so far, supported by low unemployment, steady income growth and other household finances. American shoppers will likely continue to spend as long as unemployment remains low and job growth continues.”

More worrisome are the results of the latest survey of consumer sentiment as measured by the University of Michigan, which slid another 11% for March. Declines were seen consistently across all groups by age, education, income, wealth, political affiliations and geographic regions. The gauge shows sentiment has now fallen for three consecutive months and is currently down 22% from December 2024.

“While current economic conditions were little changed, expectations for the future deteriorated across multiple facets of the economy, including personal finances, labor markets, inflation, business conditions and stock markets,” said Surveys of Consumers Director Joanne Hsu. “Many consumers cited the high level of uncertainty around policy and other economic factors; frequent gyrations in economic policies make it very difficult for consumers to plan for the future, regardless of one’s policy preferences.”

Consumers from all three political affiliations agree that the outlook has weakened since February. Despite their greater confidence following the election, Republicans posted a sizable 10% decline in their expectations index in March, while for Independents and Democrats, the expectations index declined an even steeper 12 and 24%, respectively.

Click here for more from NRF/Census data, and here for more from the University of Michigan study.