In March, retail sales jumped 1.4%—more than double the consensus forecast. This phenomenal growth dispels a lot of the doom and gloom economic fears associated with President Donald Trump’s tariffs. The advanced retail sales report indicated that consumers are actively preparing for potential price hikes, as many anticipate sharply higher costs in the coming year.
Most economists had forecasted just a 1.2% increase. Despite the weak annual data, the monthly performance was robust. In fact, it delivered the biggest monthly gain since January 2023. The year-over-year increase is 4.6%. This number has been seasonally adjusted, but not for price inflation—indicative of a robust consumer in the face of persistent economic headwinds.
Chris Rupkey, chief economist at FWDBONDS, commented on the current consumer behavior, stating, “Net, net, these are simply blow out numbers on March retail sales where the rush is on like this is one gigantic clearance sale.” Consumers have been rapidly emptying store shelves. They are eager to snatch up the low prices before the tariffs go into effect and increase costs.
Of the three large sectors, food service and drinking places had the largest increase in sales at 1.8%. On the other hand, gasoline stations experienced a drop of 2.5%, illustrating the back and forth nature of consumer spending patterns. The biggest sales surge came from motor vehicle and parts dealers, with a record 5.3% increase. Much of this jump was probably consumers stockpiling goods in anticipation of the predicted effects of tariffs.
Even without counting the sales of vehicles, retail sales beat expectations with a 0.5% increase versus a 0.3% increase that economists had predicted. As far as non-retail sectors, sporting goods, hobby and music stores went up 2.4%. Building material and garden stores had an even larger increase of 3.3%.
Nothing deflates a balloon like good news. US stock futures edged down modestly, and longer-dated Treasury yields rose. The equally mixed market response to that good news indicates that despite some positive retail sales figures, investor anxiety about the overall economy is still front and center.