Strong Retail Sales In March Support a Higher First-quarter Growth Estimate and a Possible Rate-cut Delay

Brian Turner
15 Apr, 2024
New York City

The U.S. retail and food services sales for March rose more than expected as consumers continued to splurge. 

Retail and food service sales, adjusted for seasonal variation and holiday and trading-day differences, rose 0.7% from the previous month to $709.6 billion. 

Despite higher inflation and elevated interest rates, consumers continue to spend, largely because of a resilient labor market and rising wages. 

Retail sales and food service data are not adjusted for price changes, meaning they are not adjusted for inflation. 

March's total retail sales from a year ago were up 4%, and total retail sales in the first quarter increased 2.1% from a year ago. 

February monthly total retail sales were revised to a 0.9% increase from the previous estimate of an increase of 0.6%. 

Retail trade sales were up 0.8% from February 2024 and up 3.6% above last year. 

Nonstore retailers were up 11.3% from last year, while food services and drinking places were up 6.5% from March 2023.

From the previous month, sales at nonstore retailers increased by 2.7%, gasoline stations rose by 2.1%, miscellaneous store retailers rose by 2.1%, general merchandise stores rose by 1.1%, and building materials and garden stores advanced by 0.7%. 

Sales at food and beverage stores rose 0.5%, personal and healthcare stores rose 0.4%, and food services and drinking places increased 0.4%. 

Meanwhile, sales at sporting goods, hobby, musical instruments, and book stores declined 1.8%, apparel stores eased 1.6%, electronics and appliance stores fell 1.2%, and automotive dealers fell 0.9%. 

Core retail sales, which exclude sales at food services, auto dealers, gasoline stations, and building materials stores, advanced 1.1%.

Core retail sales are used in the calculation of gross domestic product, and the latest retail sales data is likely to prompt most economists to revise their estimates for first quarter economic growth. 

Strong retail sales in March followed robust employment and accelerations in inflation reports last week, suggesting that the Federal Reserve could wait longer before lowering rates in the second quarter.