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.
