I've been stacking the jobs data next to the card spending data for three months now, waiting for them to converge. They haven't. February made the gap wider. Payrolls fell 92,000. Bank of America card transactions hit their highest year-over-year growth since January 2023. The explanation is in the wage data, and it reframes what "healthy trade area" actually means right now.
The Redbook Index held at +6.7% for same-store sales. February CPI came in at 2.4% year-over-year, unchanged. Core at 2.5%, unchanged. No progress toward the Fed's 2% target. No collapse in prices either. Just a hold pattern while the labor market deteriorates underneath and the people who still have jobs keep spending.
ECONOMIC PULSE (Week of Mar 12, 2026)
→ Redbook Index: +6.7% YoY (week ending Mar 7). Holding steady for the second straight week. ▬
→ February CPI: +2.4% YoY headline, +2.5% core (released Mar 11). Food at home +3.1%. Shelter +3.0%. Apparel +1.3% MoM. ▬
→ February Jobs: -92,000 nonfarm payrolls (released Mar 6). Unemployment 4.4%. Participation fell to 62.0%. Avg hourly earnings +3.8% YoY. ▼
→ Conference Board: 91.2 (Feb). Up 2.2 pts from 89.0, still below 100. Expectations 72.0. 46% cite prices eroding finances (7th straight month above 40%). ▬
→ Michigan Sentiment: 56.6 (Feb final). March preliminary drops tomorrow (Mar 13). ▬
→ Jobless Claims: 213,000 (week ending Mar 7). Flat. Historically low despite payroll losses. ▬
→ BofA Card Spending: +3.2% YoY (February). Highest since January 2023. ▲
→ PCE (January): Scheduled for March 13 (delayed). December: +2.9% YoY, core +3.0%. ▬
Sources: BLS, FRED, Conference Board, UMich, BofA Institute. Tomorrow brings a triple data drop: Jan PCE, March Michigan preliminary, and the Fed meeting starts March 17.
Participation Rate vs. Card Spending Growth
Sep 2025 – Feb 2026. Two lines, opposite directions.
1.2M workers exited the labor force since November — if counted, unemployment would be above 5%
The people who have jobs are earning +3.8% YoY (+1.4% real). The people who don't are disappearing from the data.
Feb Payrolls
-92K
3rd loss in 5 months
Real Wage Growth
+1.4%
Earnings +3.8% vs. CPI +2.4%
Redbook Same-Store
+6.7%
Real volume growth above inflation
For site selection: Trade area employment quality matters more than population size right now. Fewer people are employed, but those who are have more purchasing power. Evaluate wage levels and participation rates, not just headcounts.
The February Jobs Number
Start with the headline: -92,000 nonfarm payrolls. Consensus expected roughly -50,000. December was revised sharply lower to -65,000. That makes three payroll losses in the last five months. The three-month average is now below +6,000 a month, effectively zero.
Healthcare lost 28,000 jobs, partly from the Kaiser Permanente strike. Leisure and hospitality shed 27,000. Construction dropped 11,000. Retail trade was one of the few sectors that didn't lose ground, adding roughly 2,300 positions.
But the labor force participation number tells the bigger story. Participation fell to 62.0%, down from 62.5% in November. About 1.2 million people have left the labor force in three months. If those people were still counted as unemployed, the headline rate would be above 5%, not 4.4%.
Here's the piece that complicates the narrative. Average hourly earnings grew 3.8% year-over-year, to $37.32. That beat the 3.5% consensus. Against CPI at 2.4%, that's roughly 1.4% in real wage growth. The people who have jobs are earning more in inflation-adjusted terms than they were a year ago. The people who don't have jobs are leaving the labor force entirely.
What this means: The consumer spending base is narrowing. Fewer people are employed, but those who are have more purchasing power. For site selection, trade area employment quality (who's working, at what wages) matters more right now than trade area population size. A high-wage, high-participation trade area looks very different from one losing workers to labor force exit.
The Spending Puzzle
Bank of America's February card data came in at +3.2% year-over-year, the strongest reading in three years. Redbook same-store sales ran +6.7%, well above the 2.4% inflation rate, which means real volume growth at large-format retailers. NRF's retail monitor showed February sales up 0.6% from January, with clothing up 11% year-over-year and health and personal care up 9.3%.
Two things are propping this up. First, tax refunds. According to Affinity Solutions data, refunds ran roughly 20% larger than last year, injecting an estimated $55 billion into the economy in February. That money shows up in card data immediately. It fades by April.
Second, pre-buy behavior. The Conference Board reported a notable uptick in intentions to buy TVs, refrigerators, microwaves, and washing machines. Nearly three in four Americans now believe tariffs will raise prices on goods they buy. The logical response: buy now before prices go up. That's a pull-forward of demand, not organic growth.
The income split persists. BofA's data shows higher-income households driving most of the growth. Lower-income spending is positive but barely above zero. That lines up with the sentiment numbers: 46% of Conference Board respondents cite high prices eroding their finances, a streak that's run seven months now.
What this means: February's spending strength has two temporary boosters (tax refunds and tariff pre-buying) layered on top of one structural support (real wage growth). The structural piece holds. The temporary pieces fade. March and April card data will show whether the consumer is genuinely strong or just front-loading purchases. For lease negotiations and tenant underwriting, distinguish between formats riding the refund wave and formats with durable demand.
Off-Price Keeps Taking Space
Last week's newsletter counted 1,400+ store closures from six retailers. This week shows who's filling the gap. Off-price and value, every time.
Burlington reported Q4 comps of +4%, well above their 0-2% guidance. Revenue hit $3.65 billion, up 11.3%. Full-year adjusted EPS came in at $10.17, up 22%. They're planning 110 net new stores in fiscal 2026 plus a new distribution center in Savannah.
TJX announced 146 net new stores this year, 104 of them in the U.S. They raised their long-term target to 7,000 stores globally, up from the current base of roughly 5,300. CEO Ernie Herrman cited capacity for 1,700 more stores with existing banners alone.
Ross already opened 17 new stores in February and March across 11 states, including the first dd's DISCOUNTS location in Utah. Full-year target: 110 new stores.
Add it up. Burlington, TJX, and Ross are collectively opening roughly 360 new stores this year. That's absorptive capacity for a significant chunk of the space coming back from closures. But Retail Dive raised an interesting question this week: at what point do off-price retailers start taking market share from each other? So far, department stores and mid-market retailers have been the primary losers. But 360 new off-price stores a year in a market with limited available space creates overlap. The math on that gets interesting in the next 12 to 18 months.
TJX
146 stores
Target: 7,000 globally
Burlington
110 stores
+ new Savannah DC
Ross
110 stores
First dd's in Utah
Macy's
1,050 jobs
3 facilities closing
Home Depot
800 jobs
Corporate + RTO mandate
Nike
775 jobs
DC automation, 3rd yr of cuts
The question: 360 new off-price stores absorb a lot of vacancy. But at what point do Burlington, TJX, and Ross start competing with each other? A center with two off-price anchors is banking on a single format thesis.
What this means: If you're backfilling vacated space, the demand pipeline is heavily off-price. Burlington, TJX, and Ross all have the balance sheets, comps, and store economics to sign long-term leases. But the concentration risk is real. A center with two off-price anchors is banking on a single format thesis. Diversifying tenant mix matters more when one format is absorbing most of the available space.
Tariff Math Gets Real
For months, the tariff conversation was about what might happen. This week's data shows what's already happening.
Apparel prices jumped 1.3% in February alone, up from 0.3% in January. Household furnishings and operations ran 3.9% year-over-year, well above the 2.4% headline. Both categories are heavily import-dependent. The timing lines up with the tariff implementation calendar.
Gap put a number on it: $250 to $300 million in gross tariff exposure for fiscal 2026. Net impact after mitigation: $100 to $150 million. They're cutting China sourcing to under 3% of total by year-end, with no single country exceeding 25% of production. CEO Richard Dickson said Gap is not planning "meaningful" price increases. That means margin compression, not price pass-through. Gap's Q4 gross margin already fell roughly 200 basis points.
Step 1 — Gross Tariff Exposure
$250–300M
Gap's total tariff cost before any mitigation. Driven by import duties on apparel and textiles across Old Navy, Gap, Banana Republic, and Athleta.
Step 2 — Supply Chain Mitigation
–$125 to –175M
China sourcing cut to under 3% of total. No single country above 25%. Sourcing diversification absorbs roughly half the gross cost.
Absorbed by sourcing shifts
~50% mitigated
Step 3 — Net P&L Exposure
$100–150M
Gap says no "meaningful" price increases. That means margin compression. Q4 gross margin already fell ~200 basis points.
Step 4 — At the Shelf
+1.3% in one month
February apparel CPI — the sharpest monthly move in the category. Not all from Gap, but the industry math is the same everywhere.
Apparel CPI — Monthly Change
The February spike stands out against recent months
Tariff costs are arriving at the register. Household furnishings +3.9% YoY. Apparel +1.3% in a single month.
Gap China Sourcing
<3%
Down from double digits, by year-end
Gap Q4 Margin Hit
~200bps
Gross margin compression
Consumers Expecting Higher Prices
75%
Believe tariffs will raise costs
For tenant evaluation: Ask how exposed their supply chain is. Retailers with strong traffic and healthy comps can absorb tariff costs. Those already struggling face a choice: margin erosion or customer loss. The ones that can't absorb are the ones most likely to renegotiate leases in 2027.
Gap's approach (absorb the cost, protect the customer) only works if you have the margin to absorb. Old Navy comped +3%. Gap brand comped +6%. Athleta comped -9%. The brands with healthy traffic can eat the tariff. The one that's struggling can't. That math applies across the industry.
Meanwhile, Kroger's new CEO Greg Foran outlined five growth priorities with e-commerce, pricing, and store investment at the top. Target cut prices on 3,000 products aimed at busy families. Both moves are defensive, designed to hold traffic in a market where grocery inflation is running 3.1% year-over-year and consumers are openly price-conscious.
What this means: Tariff costs are showing up in CPI data, particularly in apparel and home goods. Retailers with strong traffic and healthy comps can absorb the hit. Retailers already struggling will face a choice between margin erosion and customer loss. For tenant evaluation, ask how exposed their supply chain is and whether their margins can handle it. The ones that can't absorb tariff costs are the ones most likely to renegotiate leases or close locations in 2027.
The Workforce Shift
Three workforce moves from this quarter tell a consistent story.
Nike is cutting 775 distribution center jobs across Memphis and Mississippi, citing automation. They've booked $300 million in restructuring charges. It's their third consecutive year of significant layoffs.
Macy's is closing three Connecticut facilities (two fulfillment centers in Cheshire, one distribution center in South Windsor), cutting 1,050 jobs. The closures are part of the "Bold New Chapter" plan targeting $235 million in cost savings. The South Windsor facility shuts March 14.
Home Depot cut 800 corporate roles in January, mostly remote technology positions, and mandated full-time return to office for all corporate staff starting April 6.
The pattern: distribution and fulfillment jobs are being replaced by automation. Corporate overhead is being trimmed. Frontline store roles are being preserved or expanded (Target is explicitly reinvesting from corporate cuts into store hours). The warehouse job that existed five years ago is disappearing. The store associate job is changing shape but not vanishing.
What this means: Tenant space requirements are shifting. Distribution centers are getting more automated and need fewer workers but more sophisticated infrastructure (drone-compatible ceiling heights, robotic staging areas, power capacity). Retail employment is consolidating around in-store roles. For markets dependent on warehouse and distribution employment, watch how automation accelerates. The jobs going away aren't coming back.
Looking Ahead
Tomorrow is a big data day. January PCE releases at 8:30 a.m., the Fed's preferred inflation gauge. Market consensus expects headline PCE around 2.7% and core around 2.6%. If core surprises above 2.7%, any remaining expectations for a May rate cut effectively disappear. The Fed meeting starts March 17.
March Michigan Consumer Sentiment preliminary also drops tomorrow. February final was 56.6. This will be the first sentiment reading that fully reflects the February jobs miss. A meaningful drop would confirm that consumers are starting to feel the labor market weakness, not just the price pressure.
Dollar Tree reports Q4 on March 16, now operating as a single-banner company after selling Family Dollar for $1.007 billion last July. That separation makes Dollar Tree a cleaner read on the value/dollar-store format. Dick's Sporting Goods reported a record Q4 this week, and the Foot Locker integration gives them 3,200+ stores across 20 countries. FY2026 consolidated revenue target: $22.1 to $22.4 billion.
The thread connecting all of this week's data is durability. Consumer spending looks strong today. Whether that strength is structural (wage-driven, sustainable) or partially borrowed (refund-driven, tariff-front-loaded) is the open question. March will start to answer that. Watch the card data after the refund boost fades. Watch apparel and home goods prices as tariff pass-through accelerates. And watch the labor force participation number, because the employment base underneath the spending is smaller than it was three months ago.