February Retail Sales Rise 0.6%, Consumer Spending Holds Steady

U.S. retail and food services sales climbed 0.6 percent in February 2026 to $738.4 billion, according to advance estimates released by the Census Bureau on April 1. The gain partially reversed a modest January pullback — the December-to-January change was revised to down 0.1 percent from an initial reading of down 0.2 percent — and left total sales 3.7 percent above their year-ago level. The three-month window from December 2025 through February 2026 ran 3.1 percent ahead of the same period a year earlier, suggesting underlying spending momentum remains intact even as consumers navigate elevated price levels.

Headline vs. Core: Autos Lead, Control Group Stays Positive

Motor vehicle and parts dealers posted a 1.2 percent monthly gain in February, making them the single largest contributor to the headline advance. Stripping out that category, retail sales excluding motor vehicles rose just 0.5 percent — still positive, but meaningfully softer than the headline suggests. Gasoline stations added a modest 0.9 percent on the month, though the category remains 0.7 percent below its year-ago level, reflecting the price-driven nature of that segment rather than a volume surge.

The control group — which excludes motor vehicles, gasoline stations, building materials, and food services — rose 0.4 percent in February. This measure feeds directly into the Bureau of Economic Analysis's personal consumption expenditures estimate for GDP tracking purposes, and a positive reading here signals that underlying consumer spending held its ground through the month. On a year-over-year basis, the control group is up 4.1 percent, outpacing the headline's 3.7 percent gain and indicating that core spending categories are growing at a healthy clip.

Category Standouts: E-Commerce Surges, Furniture Slides

Nonstore retailers — the category that captures e-commerce and mail-order businesses — rose 0.7 percent on the month and are up 7.5 percent from February 2025, the strongest year-over-year performance among major retail segments. The continued shift toward online purchasing remains a structural tailwind for this category regardless of the broader economic cycle.

Clothing and clothing accessories stores jumped 2.0 percent in February and are 7.2 percent above year-ago levels, suggesting discretionary apparel spending held up despite lingering affordability pressures. Sporting goods, hobby, musical instrument, and book stores surged 1.3 percent on the month and are up 11.3 percent year-over-year — one of the standout performers in the report.

Food services and drinking places — a closely watched barometer of discretionary consumer behavior — gained 0.4 percent in February and are up 5.2 percent from February 2025. Restaurant spending growing faster than overall retail is typically interpreted as a sign of consumer confidence, as dining out is one of the first categories households cut when budgets tighten.

On the downside, furniture and home furnishings stores fell 1.0 percent on the month and are down 5.6 percent year-over-year, a persistent soft spot that likely reflects the continued drag from elevated mortgage rates suppressing home purchases and the associated furnishing demand. Department stores declined 3.0 percent in February on a month-over-month basis — though advance estimates are not available for this category in the advance release — and are down 5.4 percent from a year ago, extending a structural contraction trend.

Real vs. Nominal: Inflation Still in the Picture

Retail sales data are reported in nominal dollars and are not adjusted for price changes. With consumer prices still running above the Federal Reserve's 2 percent target, some portion of the nominal 3.7 percent year-over-year gain in retail sales reflects higher prices rather than greater purchasing volume. Gasoline station sales illustrate this dynamic clearly: a 0.9 percent monthly rise in that category may reflect price fluctuations at the pump rather than consumers filling their tanks more frequently.

The control group's 4.1 percent year-over-year gain, if deflated by a core goods price measure running closer to 2 percent, would still imply positive real spending growth — a constructive signal for first-quarter GDP tracking. Macro forecasters updating their nowcasts will likely interpret the February control group print as modestly supportive of real consumer spending in Q1 2026.

Consumer Health: Resilient but Not Accelerating

February's 0.6 percent headline gain, coming on the heels of a revised 0.1 percent January decline, paints a picture of a consumer who is spending but not accelerating. The year-over-year pace of 3.7 percent is solid in nominal terms but not exceptional relative to the post-pandemic spending surge. Categories tied to housing remain under pressure, while services-adjacent spending — restaurants, health and personal care — continues to hold up.

One methodological note worth flagging: the Census Bureau announced that the Annual Retail Trade Survey has transitioned to the Annual Integrated Economic Survey, which will delay the annual revision to the Monthly Retail Trade Survey benchmarks. The timing of that revision update is currently unknown, which introduces slightly more uncertainty than usual around the seasonal adjustment factors embedded in these estimates.

The next scheduled release — the March 2026 Advance Monthly Retail Trade report — is due April 21, 2026. The critical data point to watch will be whether the control group can sustain or accelerate its 0.4 percent February reading. A second consecutive positive month would firmly establish Q1 2026 consumer spending as a net contributor to GDP growth; a reversal would raise questions about whether February's gain was a one-month bounce after January's softness.