American consumers demonstrated continued strength in February and March despite emerging concerns about energy price surges linked to conflict in Iran. Retail sales rose 0.6% in February according to the Census Bureau, reversing January's decline, while core control sales increased 0.5%. Private employment added 62,000 jobs in March, marking the second consecutive month of solid job creation according to payroll processor ADP.
The resilience comes as economists watch for potential economic disruptions from the Iran war and resulting energy price increases. Consumer spending has been supported by rising wages and a strong stock market, though questions remain about whether these trends can sustain momentum through geopolitical shocks. Manufacturing activity also expanded for the third consecutive month, with the Institute for Supply Management's index reaching 52.7.
Discretionary spending categories performed particularly well, with strong sales at auto dealers, recreational and sporting goods stores, and apparel retailers. Pay growth emerged as a standout indicator, continuing to hold up despite relatively modest job creation. ADP chief economist Nela Richardson noted that wage growth reflects ongoing tightness in the labor market, providing solid support for workers.
The positive consumer data comes before the full impact of war-induced energy price increases can be measured in economic indicators. However, hiring has been concentrated in healthcare sectors that typically offer lower-paying positions, potentially limiting the broader wage growth benefits. Economists will monitor whether underlying consumer strength can weather external economic pressures in coming months.