Retail Sales Rose in February Before Iran War Disruption

Spending increased 0.6% in February, but experts warn the Iran conflict could derail consumer confidence and discretionary purchases.

Apr. 1, 2026 at 6:06pm

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Retail sales rose a better-than-expected 0.6% in February, from a revised 0.1% decline in January, the Commerce Department reported. However, analysts caution that the ongoing conflict with Iran, which has spiked gasoline prices, could dampen consumer sentiment and lead to reduced discretionary spending in the coming months.

Why it matters

The retail sales data provides an important snapshot of consumer spending, which accounts for the majority of U.S. economic activity. While the February numbers were positive, the escalating tensions with Iran and resulting surge in gas prices threaten to derail the consumer spending momentum and potentially slow the overall economic recovery.

The details

Retail sales rose across several key categories in February, including motor vehicles (up 1.2%), clothing (up 2%), electronics (up 0.5%), and health/personal care (up 2.3%). Online sales also increased 0.7%. However, analysts warn that the jump in gas prices since the start of the Iran conflict in late February could force consumers to cut back on discretionary purchases to offset the higher fuel costs, especially for lower-income households.

  • Retail sales data was released on April 1, 2026.
  • The Iran conflict began on February 28, 2026.
  • Gas prices have risen over 45% since the start of the Iran war.

The players

U.S. Commerce Department

The government agency that released the February retail sales data.

Neil Saunders

Managing director of GlobalData, a retail analytics firm, who warned that consumer sentiment has soured since the Iran conflict began.

Ksenia Bushmeneva

Economist at TD Bank Group, who noted that higher gas prices will likely lift overall sales figures in March, but real spending may decline as consumers cut back on discretionary items.

Patrick De Haan

Analyst at GasBuddy, who said gas prices approaching 4-5% of household income is when consumers really start cutting back on discretionary purchases.

Daniel Erver

CEO of Hennes & Mauritz, who said the Swedish fashion retailer expects energy prices will have a 'significant impact on consumer behavior' if the Iran war is prolonged.

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What they’re saying

“While the overall numbers are good and suggest a continued trajectory of reasonable expansion for retail, they do not reflect the problems that have arisen since the start of the Iran conflict. Since the start of March our own numbers show that consumer sentiment has soured and that rising gas prices are starting to spook consumers.”

— Neil Saunders, Managing Director, GlobalData

“This was a solid report. Higher gas prices at the pump will likely lift overall sales in March since the government retail sales figures are not adjusted for inflation. But real spending might take a hit as consumers look to offset higher fuel costs with reduced spending discretionary items, with spending on travel and recreation the most likely areas to be cut.”

— 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. Moreover, refunds will slow to a trickle by late April, providing little protection if high prices persist.”

— 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

What’s next

Economists will be closely watching consumer spending data in the coming months to gauge the full impact of the Iran conflict and rising gas prices. If discretionary purchases decline sharply, it could signal a broader economic slowdown.

The takeaway

While consumer spending showed resilience in February, the escalating tensions with Iran and resulting surge in gas prices pose a significant threat to the economic recovery. Lower-income households in particular may be forced to cut back on discretionary purchases to offset higher fuel costs, potentially dampening overall economic growth in the months ahead.