After growing 3.2 percent in January, consumer spending online, in restaurants, and stores slipped 0.4 percent in February, the U.S. labor department reported.

In February, consumers also scaled back purchases that were more likely to include interest payments, such as furniture and vehicles.

Ignoring vehicle sales, consumers spent 0.1 percent fewer dollars last month.

The figures are not adjusted for inflation, which ran at 6.4 percent in January and 6.0 in February, indicating that in both months, consumers bought, and businesses sold, fewer goods and services in real terms than the headline numbers indicate. 

Over the past 12 consecutive months, purchases of manufactured goods such as appliances and machinery also have declined.

Retail spending will fall further in coming months after a COVID-era expansion of the food stamp program has ended, “the labor market continues to cool, and households become more cautious spenders, drawing down less on savings and choosing to allocate…services over goods,” Morgan Stanley analysts wrote in a recent research note.

Macy’s has projected a 3-percent slump in sales this year, with growth returning in 2024.

TREND FORECAST: The economy is reflecting our forecast made more than a year ago that the U.S. and many parts of the world would enter a period of Dragflation, defined by a shrinking economy and rising prices.

This month’s bank failures will make banks more cautious in general: increasing their cash cushions, tightening lending standards, and trimming overhead costs.

The result will be less money available for loans to fund growth, slowing the economy even more and nudging the U.S. closer toward recession.