U.S. retail sales fell in January, as significant winter snowstorms kept consumers at home.
Retail sales dropped 0.2%, according to a Census Bureau report released on Friday, slightly better than the Bloomberg forecast of a 0.3% decrease. The numbers also show an increase from $615.9 billion in sales in January 2025.
Despite inflation slowing and strong job growth to start the year, consumers who were already tightening their wallets, were kept indoors by snowstorms that forced stores and restaurants to close and limited commuting. Retail sales might further decline in the upcoming months, as the conflict in the Middle East sends gas prices soaring and threatens to raise inflation.
“No one’s going out when you’re seeing a foot of snow,” said Andrew Zatlin, founder of Southbay Research. “No one went out shopping for cars. No one went out for gas.”
Both motor vehicles and gas stations experienced decline compared to December 2025. With the snowstorms forcing vehicles off the roads in some states, consumers had little motive to refill tanks or purchase new cars.
The extremely cold weather did have some positive impact as non-store retailers, which includes e-commerce giants like Amazon, saw a 10.9% increase from January 2025.
“On the flip side of the weather problem, people stayed at home and bought stuff online,” said Tuan Nguyen, economist at RSM US LLP.
Small storefront retailers were the most affected and some are trying to keep sales up despite the impact on margins.
For example, Nicole Nicholson, owner of a clothing outlet store Mirabella Outlet on the Upper East Side, has put everything on sale as 50% to 60% off.
“Sometimes we’re only making $5 profit in one day,” she said.
Additionally, January and February tend to be slow months in retail, according to Nicholson. Her clients, mostly middle-class, go away for the winter to escape the cold, said Nicholson.
Eva Ferris, owner of Matiell Consignment Shop, a consignment store in Manhattan, agrees.
“January and February are the worst months,” said Ferris. “Because of a lot of things combined together.” Ferris cites the weather and the lack of shopping post-holiday season on why stores see less traffic during these months.
Despite the decline in retail sales, other economic indicators show that the economy slightly stabilized in January. Whereas the market predicted unemployment would stay at 4.4% in January, the rate dropped to 4.3%, according to the jobs report released on Feb. 11. Additionally, approximately 130,000 jobs were added to the U.S. economy, according to the Bureau of Labor Statistics.
The United States Michigan Consumer Sentiment, which measures how U.S. consumers feel about the economy, personal finances, and more, rose from 3.7% in December to 6.6% in January, suggesting increased consumer confidence.
Threats to the economy in the following months that may shake consumer spending. After the U.S. and Israel bombed Iran on Saturday and killed Ayatollah Ali Khamenei, Iran’s supreme leader, the economy may face destabilization. If the conflict lasts longer than the “four to five weeks” President Trump initially stated, or any threats are made towards sources of oil and gas in countries like Qatar and Saudi Arabia, there may be elevated inflation and energy costs.
“The downside risk of conflict in the middle east is it’s going to affect electricity cost and inflation,” said Nguyen. “Inflation could be 3.5% or 4%.”
Inflation is currently low at 2.4%, but still higher than the Federal Reserve’s goal of 2%. If prices rise because of the war, consumers are more likely to further cut back on spending, including restaurants and bars.
Additionally, a jobs report released on Friday by the U.S Bureau of Labor Statistics shows the economy is more shaky than expected, as 92,000 jobs were cut from the economy and unemployment raised back up to 4.4% in February. Revisions were also made to the December jobs report, resulting in a decline of job growth. The news comes as a disappointment, as previous data suggested the economy was slowly strengthening.
U.S. Senator Kirsten Gillibrand of New York, blamed President Trump and the republican party for the “horrific jobs report” on Friday in a statement. “Their failed policies have led to job losses, higher prices and a weaker economy,” said Gillibrand.