Weak Consumer Spending Presents a Puzzle

The U.S. job market is booming and workers’ paychecks are growing thanks to a tax cut and raises. But Americans hunkered down on spending last month, a puzzle for an economy that leans heavily on their willingness to consume.

Sales at U.S. retailers fell 0.1% in February, marking a three-month slide. Much of the decline was tied to lower sales of cars and weak gasoline prices. Americans also reduced shopping for furniture, health products, groceries and electronics.

February was when many Americans saw the first tangible evidence of the $1.5 trillion tax cut that President Donald Trump signed into law late last year. Tax withholdings fell, increasing take-home pay.

That boost—along with high stock and property values, and a labor market that has added an average of 242,000 jobs a month over the past three months—is expected to prod Americans to go out shopping. The hope is that, in turn, factories will ramp up production and economic growth will pick up. So far, that hasn’t happened.

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