Retail sales surge 0.7% in March as Americans seem unfazed by higher prices with jobs plentiful
March paints a picture of resilience in consumer spending, surpassing economists' expectations despite ongoing inflationary pressures. Retail sales increased by 0.7% in March, nearly double the forecasted rate, following a 0.9% rise in February. Even after excluding gas prices, which have been climbing, retail sales still showed a solid increase of 0.6%. While retail sales provide insight into consumer spending, they don't cover services like travel and hotel stays. However, the restaurant category saw a modest uptick of 0.4%.
Retail sales figures aren't adjusted for inflation, which rose by 0.4% from February to March. Despite this, retailers still saw solid gains in sales, indicating genuine consumer demand. Inflation remains a concern, driven by factors like higher gas prices, rents, and auto insurance. That as well the strong retail sales report will likely delay a cut by the Federal Reserve to interest rates that many had anticipated at the next meeting. Andrew Hunter, deputy chief U.S. economist at Capital Economics, doesn't think any rate cut will happen until September.
Consumer behavior remains robust in spending due to reduced optimism about economic prospects, high living costs, and borrowing expenses. Consumers are becoming more selective in their purchasing decisions, focusing on value and essentials.
It's interesting to see this article after analyzing the PCE index for my newsletter project. March was actually when good's consumption increased 1.1% so it doesnt surprise me that retail sales were up so much that same month. From what I learned, I feel that consumer demand is still greater than prices so people are still buying and consuming regardless of the price increase. It also tell me that the price increase has not gotten to a point to change consumer beahvior and deter people from buying.
ReplyDeleteI'm curious what the impact of social media is on total retail sales. It seems like many people will buy trending items even if they can't afford them. I've heard peers complain about not having money while also buying new name brand clothing or water bottles. I think we have seen a rise in the social value of having these trending items, so I wonder if it is at all responsible for the retail sales figures.
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