Retail sales climbed to a higher-than-expected 0.7% in March
Retail sales climbed to a higher-than-expected 0.7% in March
Retail sales rose 0.7% in March — much more than expected. Consumers are still spending, clearly, despite inflation — but that spending looks a little different now than it has the past few years.
They have pulled back in some places, like big “revenge” purchases, for example.
A lot of people bought stuff on the internet last month. Spending at nonstore retailers — think Amazon — rose 2.7%. That’s more than any other category.
“People are spending less in department stores and more online,” said Christine McDaniel at George Mason University’s Mercatus Center.
She said while that’s not exactly a new trend, the increase is notable: “It just shows you how much Americans rely on e-commerce.”
In addition to all that online shopping, Gregory Daco, chief economist at EY-Parthenon, said people went out and spent money in person last month.
“They were also spending freely at restaurants and bars, and in general-merchandise stores. They were also spending a little bit more at gasoline stations,” he said.
Though, he said, part of that was that gas prices were higher.
“At the same time, they were exercising a little bit more caution when it comes to spending on electronics, clothing and sporting goods,” Daco added. Spending in all three of those categories dropped in March.
Jack Kleinhenz at the National Retail Federation said people also spent less on stuff for their homes — another trend that’s persisting.
“For many months, almost a couple of years now, we haven’t seen any strength in furniture and home furnishings,” he said. “There has been mixed data on electronics and appliance stores. And even to a certain extent, building material and garden supplies.”
Some of that is because people bought a lot of furniture and appliances early in the pandemic.
And he said some of it is because interest rates — and mortgage rates — are high.
“These high interest rates have really prohibited people from buying homes,” Kleinhenz said. And things that go in them.
But, Kleinhenz said, even though people have pulled back in some places, overall consumer spending remains strong.
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