US retail sales dropped 1% in March from the prior month, the Commerce Department reported on Friday, a steeper decline than the 0.4% fall forecast by Refinitiv and larger than the revised 0.2% decline recorded in February.
US retail sales fell 1% in March, exceeding forecasts for a decline
US retail sales dropped 1% in March from the prior month, the Commerce Department reported on Friday, a steeper decline than the 0.4% fall forecast by Refinitiv and larger than the revised 0.2% decline recorded in February.
The figures are adjusted for seasonality but not for inflation. Excluding gas station sales, retail spending fell 0.6% in March from February, though retail spending was up 2.9% year-over-year.
Spending at general merchandise stores fell 3% in March from the prior month, and spending at gas stations declined 5.5% over the same period.
The Internal Revenue Service issued $84 billion in tax refunds in March, approximately $25 billion less than it issued in March 2022, according to Bank of America analysts. Credit and debit card spending per household tracked by Bank of America researchers moderated in March to its slowest pace in more than two years, which the bank attributed to smaller refunds, expired benefits, and slowing wage growth.
Enhanced pandemic-era benefits provided through the Supplemental Nutrition Assistance Program expired in February, which may also have weighed on spending in March, according to a Bank of America Institute report.
Average hourly earnings grew 4.2% in March from a year earlier, down from the prior month's annualized 4.6% increase and the smallest annual rise since June 2021, according to the Bureau of Labor Statistics. Employers added 236,000 jobs in March, a smaller gain than the average monthly pace over the prior six months, though the BLS described it as robust by historical standards.
The number of available jobs remained elevated in February but was down more than 17% from its peak of 12 million in March 2022, according to the latest Job Openings and Labor Turnover Survey. Revised data also showed that weekly claims for US unemployment benefits were higher than previously reported.
Federal Reserve economists had forecast subdued growth with recession risks before the collapses of Silicon Valley Bank and Signature Bank, and now expect the US economy to enter a recession later in the year as the lagged effects of higher interest rates take hold.
Consumer sentiment tracked by the University of Michigan held steady in April despite the banking crisis, but year-ahead inflation expectations rose a full percentage point, from 3.6% in March to 4.6% in April, with higher gas prices cited as a factor.
- The source does not state which specific retail categories, beyond general merchandise and gas stations, drove the overall 1% decline.
- The source does not specify what proportion of the year-over-year 2.9% retail sales increase was affected by inflation.
- The source does not state the exact timing or scope of the Federal Reserve's recession forecast beyond 'later in the year.'
- The source does not provide the Employment Cost Index figure for the first quarter of this year, noting only that it will be released later in the month.
- The source does not state when the Bank of America Institute report was published or the methodology behind its household spending tracking.
- The source was updated with additional context and details, but the nature of those updates is not specified.