Early signs of softer U.S. consumer spending

April 2, 2020 – Retail sales (excluding auto sales) growth decelerated again in February to 4.2 percent on a year-over-year (YoY) basis after a 4.5 percent pace in January. So far this year the growth trend in retail sales has been downward. The closely-watched control group (which feeds into the calculation of GDP growth) was revised higher in January but was flat in February, signaling that consumer spending started to lose a bit of momentum so far in Q1. 

Consumer confidence changed very little from January to February, increasing just 0.3 points. Consumers’ confidence in the present situation fell for the first time since October, while future expectations increased for the second consecutive month.

There is evidence that consumer spending softened in February even as job and income growth remained solid. Sales fell across a broad-range of categories for the month. We will be looking for signs of more cautious consumers in the months ahead.

—Michael Brown, Principal U.S. Economist at Visa.

Strong job growth continued for the second straight month, while prices increased more than 2 percent for the fourth month in a row. Consumer confidence remained steady. Overall February’s consumer sector data remained solid and it was a great month for consumers.

—Travis Clark, U.S. Assoc. Economist at Visa.

Other highlights of this report:

• February price growth remained above 2 percent (YoY) for the fourth consecutive month, decreasing only 20 basis points for the month.
• Consumer confidence changed very little from January to February, increasing just 0.3 points. Consumers’ confidence in the present situation fell for the first time since October, while future expectations increased for the second consecutive month.
• The jobless rate dropped to 3.5 percent, while the labor force participation rate remained at 63.4 percent for another month.

Download complete report (PDF), including key monthly consumer indicator charts  

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