American consumers pulled back their spending to start 2026, extending the malaise in retail sales that began late last year.
Retail sales fell 0.2% in January, following a flat reading in December, according to the Commerce Department’s report issued on Friday. January's figure came in below the forecasts of economists, who were expecting another flat reading, The report was delayed because of the 43-day government shutdown.
The January retail figure was weighed down by a sales decline at motor vehicle and auto parts dealerships. Gas stations also saw a drop in business, reflecting lower gas prices in January, though the intensifying war in the Middle East is driving up prices in recent days. The national average price for a gallon of unleaded gasoline was $3.32 Friday; a week ago, it was $2.98, AAA said
Excluding business at gas stations and auto dealers, retail sales rose 0.3% in January, according to the Commerce Department.
Economists also believe that severe winter weather throughout most of the country also hurt sales as shoppers were unable to go to physical stores. In fact, online retailers enjoyed a 1.9% sales increase in January.
Health and personal health stores were among the worst performers, falling 3% from December. And sales at clothing stores fell 1.7% from December. Consumer electronics and appliance retailers also struggled with sales declines.
Among the categories that saw gains were home furnishings and building materials, which includes landscape and gardening supplies.
The snapshot offers only a partial look at consumer spending and doesn’t include many services, including travel and hotel lodges. But the lone services category – restaurants – registered a dip of 0.2%.
The so-called control group — which excludes sales of autos, gas, building materials, and restaurant meals and which is used to calculate economic growth — rose 0.3%, according to economists' calculations.
Tim Quinlan, an economist at Wells Fargo, noted in a report that spending in January was sturdier than the headlines suggests. He noted February looks a bit weaker, hurt by a continuation of severe winter weather. He expects that higher tax refunds will help prop up spending in March, but he's worried about the rise in gas prices.
“One big caveat will be how gas prices evolve in the wake of the conflict in Iran with households sensitive to the price at the pump, ” he wrote Friday. “Consumers are fairly sensitive to gas prices, and the average price of a gallon of gasoline is already up by 25 cents in the first week of March compared to the average registered in February on the national level. ”
Quinlan noted that higher prices will boost these nominal retail figures, but would translate to “lower real, or inflation-adjusted consumption.”
The government retail sales report comes as major retailers in recent weeks have reported their fiscal fourth-quarter reports, and so far the results have been a mixed bag.
Walmart Inc. delivered another impressive quarter as lower prices and speedy deliveries attracted Americans ranging from cash-strapped to wealthier households. But rival Target reported earlier this week another quarterly decline in profits and sales during the critical holiday period as the discounter struggles with its own merchandising missteps and confronts a consumer who is focusing more on essentials.
Meanwhile, Home Depot’s fourth-quarter performance was tempered by ongoing caution from American consumers in a weak housing market, but the home improvement retailer’s results topped Wall Street expectations.
Retailers are confronting a shifting tariff landscape, making it hard for retailers to make decisions on hiring and merchandise orders.
The Supreme Court struck down the biggest and boldest of Trump’s tariffs – though President Donald Trump is replacing them with new ones. The job market remains under strain as uncertainty around tariffs and the economy have made employers cautious about hiring.
American employers unexpectedly cut 92,000 jobs last month, according to the Labor Department’s report on Friday. The unemployment rate moved up to 4.4%. Hiring deteriorated from January, when companies, nonprofits and government agencies added a healthy 126,000 jobs. Economists had anticipated 60,000 new jobs in February.
FILE - Laptop computers are displayed at a retail store in Vernon Hills, Ill., Thursday, Aug. 7, 2025. (AP Photo/Nam Y. Huh, File)
Iran’s president rejected a demand by the United States for an unconditional surrender on Saturday and apologized for Iran’s attacks on regional countries, as Israel and the United States kept up their airstrikes targeting the Islamic Republic.
Gulf countries say they have intercepted more ballistic missiles and drones launched from Iran.
Saudi Arabia said it stopped four drones attacking the country’s massive Shaybah oil field, the second attack within hours. Flights in and out of Dubai International Airport were interrupted after passengers were ushered down into train tunnels as several blasts were heard and the alert sounded.
Meanwhile, Israeli warplanes hammered Beirut and Tehran. Death toll continued to rise Saturday with at least 1,230 people killed in Iran, more than 200 in Lebanon and around a dozen in Israel, according to officials. Six U.S. troops were reported killed.
U.S. President Donald Trump’s administration approved a new $151 million arms sale to Israel after Trump said he would not negotiate with Iran without its “unconditional surrender.”
Here is the latest:
Dubai and its long-haul carrier Emirates said Saturday the airline would resume operations after temporarily halting them following an Iranian attack on the city-state.
The news brought cheers in Dubai International Airport, where passengers had been sheltering after hearing a large boom overhead.
Authorities have not explained if there was an interception or damage at the airport, which is the world’s busiest for international travel.
An Israeli airstrike flattened a residential building in southern Lebanon, killing at least six people early Saturday, the country’s state-run news agency reported.
The dead from the strike in Jibchit town included four from the same family, the National News Agency said.
The Lebanese Health Ministry earlier reported at least 16 killed and 35 wounded in overnight Israeli airstrikes in the mountain town of Nabi Chit.
Sirens sounded in Bahrain ahead of a potential attack for the fifth time Saturday, the interior ministry said, urging people to head to the nearest safe location.
The Lebanese Health Ministry said Saturday that Israeli airstrikes killed at least 16 people and wounded 35 others in overnight Israeli airstrikes in the mountain town of Nabi Chit.
The Iranian-backed militant group Hezbollah said its fighters clashed with an Israeli force that landed late Friday in the mountains of eastern Lebanon.
Israel has yet to comment on the fighting there.
The Dubai Media Office issued a statement on behalf of the city-state, saying: “For the safety of passengers, airport staff, and airline crew, operations at Dubai International (DXB) have been temporarily suspended.”
It did not give a reason for the suspension, which came after passengers there heard a loud boom while sheltering.
Masoud Pezeshkian said the country’s three-man leadership council had been in touch with the armed forces over the attacks.
“I should apologize to the neighboring countries that were attacked by Iran, on my own behalf,” the president said. “From now on, they should not attack neighboring countries or fire missiles at them, unless we are attacked by those countries. I think we should solve this through diplomacy.”
He also suggested miscommunication in the ranks caused it. However, his statement aired after repeated attacks Saturday morning on Bahrain, Saudi Arabia and the United Arab Emirates.
Iran’s paramilitary Revolutionary Guard, which has been at the forefront of the war, answers only to the country’s supreme leader. However, an Israeli airstrike killed Supreme Leader Ayatollah Ali Khamenei, 86, at the start of the war on Feb. 28.
Pezeshkian, in his comments, specifically blamed the killing of Khamenei and other top leaders for what sounded like a loss of command and control in the armed forces for days.
It remained unclear just what command Pezeshkian and the leadership council could exert over the armed forces.
Iranian state television, after airing his speech, immediately went back to praising the country’s ongoing attacks across the region.
Passengers at Dubai International Airport, the world’s busiest for international travel, heard a boom while sheltering in train tunnels at the massive facility.
Emirates has been trying to get its sprawling travel network up and running after several days of halting flights due to the war.
Iran’s president said Saturday that a demand by the United States for an unconditional surrender is a “dream that they should take to their grave.”
President Masoud Pezeshkian made the statement in a prerecorded address aired by state television.
Pakistan cited a surge in global oil prices due to the war in the Middle East.
Petroleum Minister Ali Pervaiz Malik and Foreign Minister Ishaq Dar announced the 55-rupee-per-liter (about $0.20) increase overnight, saying the government had little choice but to pass on the impact of rising international prices.
Pakistan relies heavily on imported oil, mainly from Saudi Arabia and other Gulf countries.
The Israeli military said the Imam Hussein University in Tehran was used for the training of Revolutionary Guard officers and contained “multiple military assets” used by the Revolutionary Guard.
It said over 80 fighter jets participated in the latest wave of strikes on Saturday, which also targeted an underground compound used for storing ballistic missiles and housing command centers from where the army said “senior officials of the Iranian regime” were operating.
Targets also included launch sites in central and western Iran, the army said.
Explosions echoed across Iran’s capital, Tehran, Saturday morning as new airstrikes hit the city.
The strikes appeared to target downtown Tehran and government buildings there.
Passengers waiting for flights at Dubai International Airport, the world’s busiest for international travel, found themselves ushered down into train tunnels at the sprawling airfield after missile alert sounded.
Mobile phone alerts sounded Saturday morning in Dubai over “potential missile threats.” Emirati authorities urged the public to seek immediate shelter.
Emirati air defenses had activated over the missile threat, the government added.
Trump berated a reporter for raising the matter when the president opened the floor to questions from the media at the end of a White House meeting about how paying student-athletes has recalibrated college sports.
“I have a lot of respect for you, you’ve always been very nice to me,” Trump said to Peter Doocy, the Fox News reporter. “What a stupid question that is to be asking at this time. We’re talking about something else.”
People headed to bomb shelters across Israel early Saturday after hearing loud booms as Iranian missiles attacked more targets.
There were no immediate reports of casualties by Israel’s emergency services.
Smoke rises following an Israeli airstrike in Dahiyeh, Beirut's southern suburbs, Friday, March 6, 2026. (AP Photo/Hussein Malla)
Plumes of smoke rise as strikes hit the city during the U.S.–Israeli military campaign in Tehran, Iran, Thursday, March 5, 2026. (AP Photo/Vahid Salemi)
Smoke rises following an Israeli airstrike in Dahiyeh, Beirut's southern suburbs, in Beirut, Lebanon, Friday, March 6, 2026. (AP Photo/Hussein Malla)
