Strong February sales at stores up and down the price spectrum, from J.C. Penney to Saks, show that a broad range of shoppers are feeling more comfortable about the economy.
The question is whether rising gas, food and clothing prices will reverse the trend this spring.
Retailers on Thursday reported surprisingly strong revenue gains for February. The International Council of Shopping Centers' index of 28 retailers rose 4.2 percent compared with the same month last year. That was well above the trade group's projections for a 2.5 percent to 3 percent increase.
The gain follows a 4.7 percent increase in January and the best holiday season since 2006. The figures are based on revenue at stores open at least a year, a key indicator of a retailer's health because it excludes the effects of stores that open or close during the year.
February started slowly for merchants because snowstorms kept some shoppers home. As the month went on, weather improved, perking up sales of spring clothing.
"The underlying (spending) trend is quite good," said Scott Hoyt, senior director of consumer economics for Moody's Analytics. "But increasing costs on basic necessities (are) a growing constraint on household budgets. The question we don't know is: By how much?"
Thursday's results show a broader range of shoppers is benefiting from the economic recovery, said Michael P. Niemira, chief economist at the International Shopping Centers.
Among retailers beating forecasts were Victoria's Secret parent Limited Brands Inc.; moderate-priced department stores J.C. Penney Co., Macy's Inc. and Kohl's Corp.; teen clothing seller Wet Seal Inc; and warehouse club operator Costco Wholesale Corp.
Luxury retailers including Saks Inc. saw surging sales as the affluent kept spending, encouraged by a rallying stock market.
There were only a few stragglers. Discounter Target Corp. and clothing chain Gap Inc. both missed expectations, with Target reporting a small increase and Gap a decline.
Wal-Mart Stores Inc., the world's largest retailer, no longer reports monthly sales.
Consumer spending outside retail has shown signs of strength as well. On Tuesday, automakers reported double-digit sales gains for February, extending a recovery that started late last year.
The improving economy is fueling the growth. Consumer confidence in February rose to its highest point in more than three years, according to the Conference Board.
But the positive economic news isn't dispelling worries about rising prices. Analysts say more price shocks could scare consumers, especially low- and middle-income people, into pulling back on spending.
Clothing makers are raising prices on everything from underwear to jeans. Supermarkets are beginning to pass along rising costs for dairy, meat and other items.
But gasoline is most worrisome. The turmoil in Libya and the oil markets have pushed the national average for gasoline to $3.427 per gallon, up 30 cents since Feb. 15. Prices will reach $3.50 to $3.75 by spring, some analysts say.
If they hit $4, shoppers will change their habits, said Ken Perkins, president of RetailMetrics. They'll cut back on discretionary purchases and make fewer trips to the mall.
Another challenge for retailers in March will be a late Easter. It doesn't fall until April 24, three weeks later than last year. That calendar quirk is expected to shift sales of holiday items such as candy and children's dresses from March to April, depressing business this month.
Analysts look at the two months combined to judge spring selling.
Meanwhile, many retailers, including Macy's, Kohl's and J.C. Penney, say they're raising prices on clothing as costs rise, especially for cotton, and demand improves.
J.C. Penney officials said Friday that the company tested price increases last year to find out what shoppers were willing to pay. The company said it was more successful with price increases on more expensive brands.
"Our strategy is to walk prices up thoughtfully at rates we believe will be supported by consumers," said Michael Casey, CEO of Carter's Inc. in an address to analysts Wednesday. The maker of Carter's and OshKosh B'gosh children's clothing said it increased prices at its stores by 5 percent this spring.
It's still unclear how the rising clothing prices will affect shoppers' willingness to spend.
"We have not had a sufficient read on consumers' reaction to our higher prices," Casey said, "particularly the more significant increases planned for fall."