NEW YORK (AP) — Americans increased spending faster than expected in March, highlighting how resilient shoppers have remained despite inflationary pressures and other economic challenges.
Retail sales rose 0.7% last month, nearly double what economists expected, following a 0.9% increase in February, according to figures released by the Commerce Department on Monday. February numbers have been revised upward. This comes after sales decreased by 1.1% in January, partly due to bad weather. Excluding gasoline prices, which are on the rise, retail sales remained strong at 0.6%.
The national average gas price on Monday was $3.63 per gallon AAA, up 6 cents from a week ago and 19 cents from last month, but still 3 cents lower than this time last year.
This snapshot shows only a portion of consumer spending and excludes many services such as travel and hotels and lodges. However, restaurants, the only service sector, posted a 0.4% increase.
Government retail figures, which are not adjusted for inflation, rose 0.4% from February to March, according to the latest government report. As a result, retailers achieved solid sales growth, even accounting for inflation.
“Just because prices are going up doesn't mean retail sales are going up,” said Ted Rothman, senior industry analyst at Bankrate. “Americans are actually buying more stuff. This is one of the strongest retail sales reports we've seen in years.”
Futures prices soared seconds after the retail report was released, while bond prices fell on strong economic signals from U.S. consumers.
Sales at general merchandise stores rose 1.1%, and online sales rose 2.7%. Department stores decreased by 1.1%. Sales at furniture stores and electronics and home appliance retailers also decreased.
A strong job market and rising wages are stimulating household spending, but household spending has also become volatile in the face of rising credit costs and rising prices.
U.S. employers released another strong report in March, adding 303,000 workers to their payrolls and hoping they can weather rising prices without succumbing to recession despite high interest rates Incited.
Last month's job growth was up from February's revised figure of 270,000, and far above the 200,000 jobs expected by economists. No matter how you look at it, this amounted to a massive employment surge and confirmed the economy's ability to withstand upward pressure on borrowing costs from the Federal Reserve's interest rate hikes. As Americans continue to spend more, many companies continue to hire to meet steady demand.
But new data last week showed inflation remained stubborn, pushed up last month by rising prices for things like gas, rent and car insurance. In addition, the strong retail sales data led many to expect that the Federal Reserve's next monetary policy-making division meeting in a few weeks' time would be Interest rate cuts are likely to be delayed. Andrew Hunter, deputy chief U.S. economist at Capital Economics, doesn't expect a rate cut until September.
Prices outside the volatile food and energy categories rose 0.4% from February to March, the same pace as the previous month. Measured year-on-year, these core prices are up 3.8%, unchanged from February's year-over-year increase. The Fed tracks core prices closely because they tend to be a good barometer of the direction of inflation.
But some economists expect spending to be constrained by diminishing optimism about the economic outlook and by rising costs of living and borrowing, which remain high.
“Consumers are becoming very selective in their spending choices, with many moving away from expensive, non-discretionary products to value and necessities,” said Mickey Chadha, vice president of corporate finance at Moody's Ratings. “Low-income groups continue to be under pressure,” he said. . “Purposeful consumers are putting off important shopping decisions.”
