Dive Brief:

• Consumer spending rose a timid 0.1% in February and January’s spending numbers were revised downward to 0.1%, according to a U.S. Department of Commerce Bureau of Economic Analysis report released Monday. 

• The report also found that personal income increased $23.7 billion, or 0.2%, in February, and disposable personal income increased $23.7 billion, or 0.2%, showing that Americans are saving more. The saving rate increased to 5.4% from 5.3% in January.

• And the report continued to reflect a key challenge in the American economy, which is also a challenge for retailers: wage stagnation. Wages and salaries decreased $9.4 billion in February, compared to a $46.5 billion increase in January. Private wages and salaries decreased $12.9 billion, compared to an increase of $41.9 billion in January, while government wages and salaries increased $3.5 billion, compared to an increase of $4.6 billion.

Dive Insight:

Consumers are clearly remaining cautious despite an economy that continues to improve. The fundamentals—an improving labor market and slowly improving wages (improving in fits and starts, apparently)—do bode well for the economy and for retailers in particular.

“There’s still this sense of more of the same right now—the consumer is still chugging along, not really strong but not terribly weak, either,” Scott Brown, chief economist at Raymond James Financial Inc., told Bloomberg. “Things are a little bit softer than we’d hope to be, but still consistent with the economy growing.”

That’s been the story for a while now, and American consumers are, apparently, sticking to it. That means that retailers will likely continue to face price pressures and will have to bring a lot to the table in terms of merchandise differentiation and customer experience in order to resist those pressures.

Retailers catering to households that continue to struggle with barely moving wages will find it particularly difficult to thrive, experts have told Retail Dive. That could prove to be a significant obstacle for stores like Kohl's and Wal-Mart Stores Inc., the latter of which is trying to appeal to a more monied consumer without alienating its core customer.

“We’re the most over-stored country, and there are several overwhelming problems,” Howard Davidowitz, chairman of New York City-based retail consulting and investment banking firm Davidowitz & Associates Inc. told Retail Dive about Kohl’s faltering turnaround attempt. “People have less money and this economy isn’t helping. You cannot double your number of people in poverty in 10 years, build more stores, and not have some kind of gigantic shakeout. Kohl’s is slowing down because the middle class is getting killed.”