Retail sales were down unexpectedly in March, falling 0.3 percent when many economists expected a slight uptick. That follows flat sales numbers in February, and a drop in January.
“It’s really hard to see any real fundamental reason,” said Scott Anderson, chief economist at Bank of the West. “If you look at job growth, we’re maintaining well over 200,000 jobs a month, the unemployment rate remains steady and income growth has actually picked up as inflation has slowed down.”
Anderson said consumers may have been spooked in recent months by things like negative presidential campaign rhetoric and stock market volatility at the beginning of the year.
Nerves rattled, consumers appeared to hold off on major purchases, like autos.
“My standpoint is that it was a typical reaction to a dip in the stock market,” said Tom Leonard, president of Fury Motors, a Twin Cities auto dealer that sells RAM trucks and Chrysler, Jeep and Dodge vehicles.
Leonard said traffic at his stores was down in January and February. But he saw improvements last month, despite a drop in auto sales nationally. And he’s optimistic about the rest of the year.“What we’re seeing with our customers’ ability to buy reflects that,” he said.
The consumer’s ability to spend matters greatly to the global economy. With players like China and Brazil sputtering, the U.S. is a bright spot.
“The U.S. consumer is playing a more predominant role in the global economy,” said Chris Christopher, director of consumer economics at IHS Global Insight. “A lot of the imports we’re getting into this country because of the stronger dollar are sort of helping other countries grow or stay off their bottom.”
U.S. Treasury Secretary Jack Lew recently cautioned global leaders not to rely so heavily on U.S. consumers. But economist Scott Anderson said pretty much everyone is banking on those consumers keeping things together.
“We’re really hinging our forecast on U.S. growth this year on sustained consumer spending,” he said.
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.