Tariff concerns bring down retail sales; Inflation could stall interest rate cuts; Biotech job reductions rise

Severe winter weather and concerns over trade tariffs helped drive a February decline in U.S. retail sales from the prior month, though sales still surpassed those of a year earlier, according to the latest tracking by researchers at the National Retail Federation and CNBC.

Based on anonymous credit and debit card data gathered by consulting firm Affinity Solutions, the trade group said total sales, excluding automobiles and gasoline, were down about 0.2% from January but still topped February 2024 by 3.4%. The NRF’s monthly monitor is considered a preview of Commerce Department reporting on U.S. retail and food service sales, with February data scheduled for release on March 17.

“Consumer spending dipped slightly again in February due to the combination of harsh winter weather and declining consumer confidence driven by tariffs, concerns about rising unemployment and policy uncertainty,” NRF CEO Matthew Shay said in a statement Monday. “Unease about the probability of inflation and paying higher prices for non-discretionary goods has the value-conscious consumer spending less and saving more.”

For the moment, year-over-year gains reflect an economy with strong fundamentals, Shay said, and year-to-date sales tracked about 4.4% ahead of the first two months of 2024. But recent consumer surveys by other groups suggest buyer confidence is waning ahead of large U.S. trade tariffs slated to take effect April 2, which analysts warn could raise prices on a wide range of goods coming from Canada, Mexico and China.

The NRF said February data showed sales declining on a monthly basis in seven of nine tracked categories, but rising on an annual basis in six categories. Annual gains were led by health and personal care items at 8.3%, with grocery and beverage stores up 4%.

Categories tied to home sales and improvement projects continued to struggle. Building and garden supply store sales were down about 1% for the month and dropped 3.3% from a year earlier; while furniture and home furnishing stores declined 1% for the month and decreased 3.7% from February 2024.

Economist and consumer expectations for higher inflation in coming months, fueled by concerns over trade tariffs, could keep the Federal Reserve in no rush to reduce its key lending rate anytime soon, according to analysts at Oxford Economics.

“The Fed’s ability to fight inflation is rooted in its credibility as an inflation fighter, and anchored inflation expectations are critical,” Michael Pearce, deputy U.S. chief economist at Oxford Economics, said in a report issued Monday. “A scenario exists where the Fed may tolerate, or possibly need, the economy to weaken to offset the upward pressure on inflation and inflation expectations.”

The Federal Reserve Bank of New York on Monday joined other groups reporting consumer concerns over expected price hikes tied to pending trade tariffs on products from Mexico, Canada and China. The regional Fed’s February survey found consumer pessimism rising, with households expecting inflation to be at 3.1% a year from now on a median basis, up slightly from the prior month as inflation uncertainty increased at the one-, three- and five-year time horizons.

The New York Fed said year-ahead expectations for price growth reached levels not seen since mid-2024 for some categories. Respondents on a median basis expect prices to rise 3.7% for gasoline, 5.1% for food, 6.7% for rent and 7.2% for medical care. The Fed’s target for optimal overall inflation remains 2%.

Annual inflation based on the consumer price index was 3% in January, up from 2.9% in December. The Labor Department is slated to report February’s annual inflation rate on March 12, and the Fed’s next interest rate-setting meeting is scheduled for March 18-19. 

Biotech research has long been a big generator of real estate demand, but leasings have slowed during the past two years, and planned industry job cuts suggest the pullback could be continuing well into 2025.

Public filings showed several life science firms announcing workforce cuts so far in March. They included Boston-based Atea Pharmaceuticals, reducing positions by about 25% or 20 positions; ALX Oncology, trimming 30% of its San Francisco Bay-area workforce or 30 positions; and Bristol Myers Squibb, cutting more than 200 workers in Lawrenceville, New Jersey, and 57 in Redwood City, California.

Biotech firms of all sizes have been cutting jobs since early 2024, including global giants like Johnson & Johnson and Bayer in addition to Bristol Myers, spurred largely by shifts in research focus. The life science industry news site BioSpace tracked announced job cuts totaling more than 1,200 since the start of 2025.

Even landlords with a large base of global pharmaceutical tenants, long considered the most dependable for real estate expansion, have recently been selling off older properties or cutting back on new development as demand has cooled. They include Alexandria Real Estate Equities and IQHQ.