U.S. retail sales show surprising resilience

American consumers are continuing to show remarkable resilience in their spending habits, despite facing higher prices, particularly at the gas pump, according to retail sales data for March released by the Commerce Department on Monday.

Total retail sales jumped 0.7% on the month, while February’s number was revised up to 0.9% from 0.6%.

The swift recovery in retail sales in March, along with positive adjustments to February’s figures, suggests that the shopping hangover from January was short-lived.

Total retail sales jumped by 0.7% on the month, while February’s number was revised up to 0.9% from 0.6%. That increase came as a surprise as sales of automobiles and parts that account for 19% of all retail sales posted a 0.7% drop.

Given the notable increase in the control group that directly influences gross domestic product calculations, we’re anticipating a significant boost to the GDP figures for the first quarter when it is released on April 25.

The control group had a growth of 3.0% on a three-month annualized basis, mirroring the increase observed in December when GDP growth was recorded at 3.4% and consumer spending at 3.3%.

U.S. retail sales

But there are signs of weakness under the headline numbers. Rising prices for essentials like gasoline and food are nudging consumers to cut back on nonessential purchases, such as electronics, clothes and sports equipment, which fell by 1.2%, 1.6% and 1.8%, respectively.

Gasoline was a driving factors of the gains in sales data, increasing by 2.1%, which mostly came from rising prices not real demand.

With the recent escalation in tensions in the Middle East, and on top of an expected drop in oil supplies, energy prices should stay elevated for quite some time because of increasing uncertainty. This shift from discretionary to nondiscretionary spending is expected to remain a major factor affecting retail sales.

Let’s Talk!

Call us at (325) 677-6251 or fill out the form below and we’ll contact you to discuss your specific situation.

  • Topic Name:
  • Should be Empty:

This article was written by Tuan Nguyen and originally appeared on 2024-04-15.
2022 RSM US LLP. All rights reserved.
https://realeconomy.rsmus.com/u-s-retail-sales-show-surprising-resilience/

RSM US Alliance provides its members with access to resources of RSM US LLP. RSM US Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each is separate and independent from RSM US LLP. RSM US LLP is the U.S. member firm of RSM International, a global network of independent audit, tax, and consulting firms. Members of RSM US Alliance have access to RSM International resources through RSM US LLP but are not member firms of RSM International. Visit rsmus.com/about us for more information regarding RSM US LLP and RSM International. The RSM logo is used under license by RSM US LLP. RSM US Alliance products and services are proprietary to RSM US LLP.