Retail spending fell by 1% in March, with department store and durable goods sales affected by tax return concerns and labor market slowdown. Despite this, retail spending rose 2.9% year-over-year.
Economic Indicators:
- Retail sales fell by 1% in March from the prior month.
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Spending at department stores and on durable goods, such as appliances and furniture, was affected by a lack of tax returns and concerns about a slowing labor market.
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Smaller tax returns likely played a role in last month’s decline in retail sales, along with the expiration of enhanced food assistance benefits.
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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.
Key Points:
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Retail sales fell by 1% in March from the prior month, steeper than an expected 0.4% decline.
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The Commerce Department reported a 1% decline in retail sales for March.
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Investors attribute some of the weakness to a lack of tax returns and concerns about a slowing labor market.
Year-Over-Year Retail Spending:
- However, retail spending rose 2.9% year-over-year.
Labor Market and Consumer Sentiment:
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The US labor market remains solid, even though it has lost momentum recently.
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Michelle Meyer, North America chief economist at Mastercard Economics Institute, said this could hold up consumer spending in the coming months.
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Employers added 236,000 jobs in March, a robust gain by historical standards.
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The latest monthly Job Openings and Labor Turnover Survey (JOLTS) report showed that the number of available jobs remained elevated in February but was down more than 17% from its peak of 12 million in March 2022.
Expectations for the US Economy:
- Economists at the Federal Reserve expect the US economy to head into a recession later in the year as the lagged effects of higher interest rates take a deeper hold.
