February US retail sales remain strong despite market volatility: Here's why

February’s monthly retail sales data came in below expectations, increasing 0.2% from the prior month versus an expected 0.6%. However, core retail sales, excluding the more volatile components of autos and gasoline, rose by 1% from the previous month. This increase follows a 1% decline in January, largely due to adverse weather conditions and exceeded expectations, indicating resilience in consumer spending despite external challenges. Although the headline monthly figures fell short of expectations, year-over-year growth remains stable, increasing by 3.1% compared to the previous year. This represents a slight deceleration from January's 3.9% but still serves as a positive sign of economic health.

For investors, retail sales are a key economic indicator reflecting consumer confidence and spending power, which drives economic growth. The February data suggests that despite softer sentiment due to trade policy uncertainties, the underlying economic fundamentals remain intact. It’s also important to remember that a single data point doesn't define a trend. While economic data may meet, fall short of, or exceed expectations, it's the long-term trends that offer a more accurate picture of the economy.

Overall, the February retail sales report offers a cautiously optimistic outlook. While sentiment data suggests potential headwinds, the steady growth in actual economic outcomes provides confidence. Investors should remain vigilant, remember their long-term financial goals and focus on diversification when navigating the potential impact of sentiment-driven uncertainties on future economic performance.

All market and economic data as of 03/17/25 are sourced from Bloomberg Finance L.P. and FactSet unless otherwise stated.

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