Retail had a 'surprisingly robust' first quarter, but the real test is ahead as tax refunds dry up

Shoppers enter and exit a Dior luxury boutique in Venice, Italy, on Nov. 16, 2025. Michael Nguyen/NurPhoto via Getty Images The retail industry emerged from a choppy first quarter relatively unscathed, but higher than usual tax refunds and an uptick in buy now, pay later use likely helped to buoy spending. As Wall Street looks ahead to the second quarter, the period could offer a clearer view on consumer health and just how much high gas prices and persistent inflation have disrupted the economy and pressured already-strained household budgets. "Once you got through April and May, you're really not seeing the impact of tax refunds anymore, and those months were a little bit choppier, so there's a lot of moving pieces that maybe kept the consumer going for longer than we would have expected," said Janine Stichter, a retail analyst and managing director at BTIG. "As you peel back these tax refunds, you might start to see some of the underlying weakness … the consumer has not yet fully fallen apart and that's why I think people are really looking to Q2 to say, 'All right, well, what does the health of the consumer actually look like?'" The period between February and May — which encompasses many retailers' fiscal first-quarter results — brought a fresh wave of concerns about household spending. President Donald Trump started a new conflict in the Middle East , which led to surging gas prices , plummeting consumer confidence and renewed concerns about the health of the U.S. …