Retail Sales Rise 0.6% in February, but Iran War Threatens Spending

Shoppers increased spending on cars and clothing, but higher gas prices could derail future consumer activity.

Apr. 1, 2026 at 2:20pm

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Retail sales in the United States rose 0.6% in February, beating expectations, as shoppers spent more on cars, clothing, and other discretionary items. However, the ongoing Iran war has sent gas prices soaring, which could dampen future consumer spending as Americans are already dealing with elevated inflation.

Why it matters

Retail sales are a key indicator of the health of the U.S. economy, as consumer spending accounts for the majority of economic activity. The rise in February sales suggests that consumer confidence and spending power remain relatively strong, but the potential impact of the Iran war on gas prices poses a threat to future spending and economic growth.

The details

Retail sales increased across several key sectors in February, including motor vehicles and auto parts (up 1.2%), clothing and accessories (up 2%), and health and personal care stores (up 2.3%). Online sales also rose 0.7%. However, the impact of the Iran war, which began on February 28th, is not yet reflected in the data. Gas prices have spiked, with the national average reaching $4.06 per gallon, a dollar more than before the war started. Economists warn that higher gas prices could force consumers to cut back on discretionary spending, especially on travel and entertainment.

  • Retail sales rose 0.6% in February 2026.
  • The Iran war began on February 28, 2026.
  • Gas prices reached an average of $4.06 per gallon on March 1, 2026.

The players

U.S. Commerce Department

The government agency that released the retail sales data for February 2026.

Ksenia Bushmeneva

An economist at TD Bank Group who analyzed the retail sales report.

Samuel Tombs

The chief economist at Pantheon Economics who warned about the potential impact of higher gas prices on consumer spending.

Patrick De Haan

An analyst at GasBuddy, a company that tracks fuel prices, who discussed the threshold at which higher gas prices significantly impact consumer behavior.

Daniel Erver

The CEO of Hennes & Mauritz, a Swedish fast fashion chain, who said higher energy prices could significantly impact consumer behavior.

Darren Rebelez

The CEO of Casey's General Stores, a convenience store chain, who said a significant pullback in customer spending is unlikely unless gas reaches $5 per gallon.

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What they’re saying

“This was a solid report.”

— Ksenia Bushmeneva, Economist, TD Bank Group

“The hit to real incomes from higher gas prices is especially regressive, hurting lower-income households disproportionately, while the lift from tax refunds is more evenly spread.”

— Samuel Tombs, Chief Economist, Pantheon Economics

“When that gets up to about 4, 4 1/2, 5%, that's really when people really start trimming back on some of their discretionary purchases.”

— Patrick De Haan, Analyst, GasBuddy

“Energy prices will have a 'significant impact on the consumer behavior' if the war is prolonged.”

— Daniel Erver, CEO, Hennes & Mauritz

“A significant pullback in customer spending is unlikely unless gas approaches $5 per gallon.”

— Darren Rebelez, CEO, Casey's General Stores

What’s next

Economists will closely monitor the impact of rising gas prices on consumer spending in the coming months, as the full effects of the Iran war are reflected in the data. Policymakers may need to consider measures to offset the burden on lower-income households if gas prices remain elevated.

The takeaway

While the February retail sales data showed resilient consumer spending, the looming threat of higher gas prices due to the Iran war could derail future economic growth by forcing Americans to cut back on discretionary purchases. This highlights the fragility of the economic recovery and the need for policymakers to address the impact of rising inflation on household budgets.