Retail sales increased for second consecutive month in March

Washington
CNN
—

U.S. retail spending rose for the second consecutive month in March, highlighting the strength of U.S. consumers supported by a robust job market.

Retail sales in March rose 0.7% from the previous month, the Commerce Department said Monday, slower than the upwardly revised 0.9% increase in February. That beat the 0.4% increase expected by economists, according to a FactSet survey. This figure is adjusted to account for seasonal fluctuations, but not for inflation.

Retail spending rose in seven of the past 10 months through March.

March sales increased by a significant 2.1% from February, with increases in several categories including gas stations. Gasoline prices have been steadily rising over the past few weeks. Still, excluding gas station sales, retail sales rose 0.6% in March.

Online sales rose 2.7% in March, while specialty store sales rose a solid 2.1%. Spending at restaurants and bars rose 0.4% last month. Meanwhile, sales of electronics, clothing, and sporting goods decreased by 1.2%, 1.6%, and 1.8%, respectively.

“Today’s retail sales indicate strong consumer spending to close out the first quarter of 2024,” Claire Tassin, retail and e-commerce analyst at Morning Consult, said in a note on Monday. Ta. “Promotional activity by e-commerce brands such as Amazon contributed to the increase in online sales in March.”

Monday’s report provides further evidence that the U.S. economy remains strong, with the Federal Reserve remaining in wait-and-see mode. A strong economy means the Fed is in no hurry to cut rates, especially given signs that inflation has slowed in recent months. Fed officials said they were not yet convinced that inflation was truly on track to reach their 2% goal.

“Inflation is above target, economic growth continues to show momentum, and prices are rising across a wide range of asset markets,” Kansas City Fed President Jeffrey Schmidt said Friday at a conference in Overland Park, Kansas. Therefore, the current monetary policy stance is appropriate.” . He will not vote on interest rate decisions this year.

“Therefore, rather than pre-emptively adjusting policy rates, we would like to patiently wait for clear and convincing evidence that inflation is on track towards the 2% target before adjusting policy stance. I’m thinking about it.”

Interest rates are currently at a 23-year high since the Fed began aggressively raising rates two years ago. Analysts at major Wall Street banks have recently delayed their predictions for the timing of the first rate cut. Goldman Sachs now expects the first rate cut to be in July rather than June, while Bank of America now expects the first rate cut to be in December rather than June.

Americans have been spending so much more in recent years, and economists say that trend is likely to continue this year.

The U.S. economy grew rapidly last year, thanks to strong consumer spending, which accounted for about two-thirds of economic growth. Spending remains strong despite still high inflation and rising interest rates.

“Households haven’t changed their spending patterns; they’ve changed everything else,” Wells Fargo economist Shannon Seely Grein previously told CNN. “Their mentality has changed and they are changing everything to suit their spending patterns. They are reducing their monthly savings and withdrawing funds from other assets such as retirement accounts. We’re seeing an increase in “buy now, pay later,” and credit card usage continues to rise. upon. ”

“I think households will continue to spend at the same pace,” she added.

The Commerce Department will release broader statistics on March consumer spending later this month. Spending on goods and services rose 0.8% in February, the largest monthly increase in more than a year. Consumer spending has not contracted since March 2023.

And as long as the job market is healthy, so is spending. Employers added a shocking 303,000 jobs in March as the unemployment rate fell to a low of 3.8% for the month. Annual wage growth, measured as average hourly wages, slowed last month but continued to outpace inflation.

The US job market is currently one of the strongest in history. Job growth has expanded for 39 straight months, the fifth-longest streak in history, and the unemployment rate has been below 4% for more than a year.