U.S. retail sales rose in February, signalling continued strength in consumer spending despite economic pressures tied to the Iran-driven energy crisis. Growth risks remain tied to oil prices and geopolitical uncertainty.
BNN Bloomberg spoke with Russel Price, chief economist at Ameriprise Financial, who said solid household finances and improving labour trends are helping support the economy even as higher energy costs threaten near-term growth.
Key Takeaways
- U.S. retail sales rose 0.6 per cent in February, with broad-based gains despite weather-related disruptions.
- Consumer spending remains a key pillar of growth, supported by income gains and relatively low debt levels.
- Rising oil prices tied to the Iran conflict are expected to slow growth and push inflation toward 3.5 per cent in the near term.
- Oil sustained above $150 per barrel could raise recession risks, depending on duration of supply disruptions.
- Job growth remains steady, with gains in small businesses and improving manufacturing activity supporting labour demand.
Read the full transcript below:
ROGER: A slight gain for U.S. retail sales in February after a decline the month before. My next guest believes consumer spending habits will continue to support ongoing economic growth in the U.S. Let’s hear more now from Russel Price, chief economist at Ameriprise Financial. Russel, thanks very much for joining us.
RUSSEL: Good morning.
ROGER: All right, the numbers out today slightly better than anticipated. Where do they fit in?
RUSSEL: Yeah, six-tenths gain in February is actually pretty good, especially considering the bad weather that we had during the month. Of course, the weather was even worse in January, and we saw a decline then, but the February numbers were pretty broadly distributed on the positive side. One of the only sectors that was down was furniture sales, and you would expect to see that during bad weather. We also had a bounce back in automobile sales that offered a little bit of upside to the overall number. On a year-over-year basis, sales were about four per cent higher. That’s indicative of consumers that have been seeing pretty good income growth and spending, and it looks like that’s continued.
ROGER: Anything in the numbers that was a little surprising?
RUSSEL: Well, the one thing I thought was a little bit surprising was sales of construction materials were quite good in both January and February. When you have bad weather like we did this past January and February, typically new home construction and remodeling activity declines momentarily, and we didn’t really see that, at least as far as sales of building materials go this past quarter.
ROGER: Now, do we know why? Was that people marking prices down to get people in, or is there growing demand somewhere?
RUSSEL: Well, I think if prices were marked down materially, that would have taken down the overall sales numbers. So I do think that it’s indicative of ongoing, relatively solid demand. We did see new building activity from home construction numbers from the Census Department down in January, but again, I think that’s largely weather-related, and we should see a pretty strong bounce back in February and March from those numbers.
ROGER: Okay. And now overall with the U.S. economy, what we saw in the numbers today, and factoring in everything with oil and what’s happening in the Middle East, how is the U.S. economy looking right now?
RUSSEL: Yeah, the situation in Iran and the resulting jump in energy commodity prices, along with higher prices for food from fertilizer costs and plastics, we should expect to see a slowdown in March and probably the second quarter, as long as the situation persists. But generally, we came into this year with the consumer in pretty good shape, primarily from a debt burden standpoint. Typically, when consumers are in good financial shape, that’s good for economic prospects. When consumers are deep in debt, that’s not good for economic prospects.
So we came into this year looking for inflation to subside. Of course, we’ll see inflation now jump up once again. We’ll probably see it around three and a half per cent in the next few months. If oil prices remain around $100 to $110 a barrel, that would equate to about $4 to $4.50 in gasoline. That will boost inflation momentarily and take down the pace of economic growth, hopefully only temporarily. As the situation resolves, we should see the economy regain momentum.
ROGER: Now we did hear talk of possibly $150 a barrel for oil. We briefly got up to that $120 mark. It seems like it’s calmed down. What would drive it to $150 if the war isn’t resolved?
RUSSEL: The two main factors are how high prices go and how long the situation persists. The longer it persists, the more it will continue to push oil prices higher because reserves that many countries are relying on are being drawn down. If the Strait of Hormuz remains closed for several months, we are going to see higher energy prices and likely higher prices for food and plastics.
We could see $150 a barrel if the situation were to last between five and seven months. If it were to last for a full year, we could see prices move above $150, possibly even to $200 a barrel. But again, that’s a low-probability scenario in our estimation.
ROGER: And in the middle of all this, there are some good numbers when it comes to jobs. Do you see that trend continuing?
RUSSEL: We had a pretty good ADP employment report this morning — 62,000 net new jobs created last month in the private sector. It was somewhat lopsided, with about 85,000 new jobs in the small business sector. That’s a bounce back from last year, when small businesses were shedding workers, largely due to tariffs and the added administrative burden.
Small business hiring had slowed significantly, but in February it rebounded. We did see small declines in medium- and large-sized businesses, which may indicate growing caution about how long the situation with Iran lasts and what that could mean for labour demand.
ROGER: Does it look like we’re coming out of the slow-hiring phase?
RUSSEL: I do think so. We started to see some improvement late last year, and it’s encouraging to see the rebound in small businesses. We’re also seeing better growth in manufacturing and services. Manufacturing PMI has been above 52 for the past three months — something we haven’t seen since 2022 — supported by strong new orders and production. Employment is still slightly below break-even, but as long as new orders remain positive, we should see improved hiring.
We’re looking for manufacturing to add about 6,000 net new jobs in Friday’s employment report.
ROGER: Okay, we have to wrap it up there. Russel, thanks very much for joining us.
RUSSEL: My pleasure.
ROGER: Russel Price is chief economist at Ameriprise Financial.
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This BNN Bloomberg summary and transcript of the April 1, 2026 interview with Russell Price are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
