For a few weeks, it looked like the U.S. consumer might have gone cold.
December retail sales came in flat despite the usual holiday rush as spending across categories like apparel, furniture and restaurants all softened over the month, according to data compiled by the Commerce Department.
Then came Winter Storm Fern.
The last week of January brought the coldest end to the month since 1995 and the most snowfall in 60 years, according to the retail weather analytics firm Planalytics. Mall traffic plunged. Outlet center visits fell nearly 13% from a year earlier, and apparel retail traffic dropped more than 8%, the firm estimates.
So the question now for both Main Street retailers and Wall Street investors is whether the weather temporarily froze spending or exposed a deeper chill in consumer demand.
The answer depends on where you look.
First, the good news: Foot traffic data from Placer.ai shows that retail traffic had rebounded from thost late January declines by the first week of February, with indoor malls up more than 7% and open-air shopping centers climbing nearly 8%.
In another sign of resilience, the Bank of America Institute's latest “Consumer Checkpoint” report showed that January's “total card spending per household rose 2.6% year-over-year" — the strongest pace in nearly two years — despite weather‑related disruptions.
Internal bank data also showed that the winter storm’s drag on spending was heavily concentrated in the South, lower Midwest and Northeast of the country, according to the report, released Thursday.
More than just the weather threatens to chill the consumer outlook this winter, however.
The little 'k' inside the big 'K'
Bank of America's report sounded fresh alarms about a trend that has been evolving for several years: high earners driving much of overall consumer spending.
“We are concerned that a ‘K’ shape is opening up between higher-income households and middle-income households, alongside the existing gap with lower-income households,” David Michael Tinsley, a senior economist at the institute, wrote in the report.
Ted Rossman, a principal analyst at Bankrate, said this spending by higher-income households is masking cutbacks that are happening further down the income ladder.
“Many lower- and middle-income households are tapped out by the cumulative effects of inflation and high interest rates,” he wrote in an email to NBC News.
Although inflation cooled overall last month, sticky categories like food and shelter continue to pose affordability challenges for many households.
Prolonged cold weather also typically translates into higher utility bills. In January, utility prices rose 9.8% from a year earlier, adding to the pressure.
Plus, the January jobs report offered its own mixed signals: Hiring came in stronger than expected, but the gains were concentrated in just two industries, elder care and construction.
So while the broader economy appears to be stable, there are warning signs under the hood.
This uneven foundation is what makes the next few weeks particularly important as a barometer of the broader consumer outlook.
Shopping vs. saving
First up, Valentine’s Day. The National Retail Federation is projecting record spending Saturday, with total outlays expected to reach $29.1 billion.
Presidents’ Day sales and promotions are also underway this holiday weekend, as many retailers slash prices to clear out seasonal stock left over from the holidays and the previous year to make room for new merchandise.
Big-ticket items are typically on deep discount this weekend including household appliances, furniture, mattresses and electronics.
And finally, tax refunds are beginning to roll out. These are often the largest single cash infusion many households receive all year.
But this year, those refunds could be even bigger than usual because of legislation passed by Congress and signed into law by President Donald Trump in 2025.
The Bank of America Institute estimates refunds could be 25% higher this year than last.
The wild card? What Americans do with that money.
"A portion of these funds will likely be spent quickly, helping ease affordability pressures felt by lower- and middle-income households," Bank of America Institute economists wrote in a new report released Friday.
"However," the bank continued, "not all of the money will flow immediately into spending. A meaningful share of refunds typically goes into savings."
The bank said it typically sees a "fairly regular seasonal pattern" in which savings rise in the spring as bonuses and tax refunds hit bank accounts before tapering off later in the year.
"So bigger refunds this year may bolster savings for some time," the economists wrote.
It’s also possible that with more money in hand, some people will decide to spend a larger portion of their refunds now.
So yes, January brought a shopping freeze, but the coming weeks will reveal whether consumers feel financially secure enough about the future to spend in the present.
