March Retail Sales Surge Means Only Slight Slowing in Q1 PCE
A 1.6% increase in March retail sales and a 1.0% pick-up in the control group offers evidence that the U.S. consumer has not gone into hiding despite some soft readings in earlier data.
Rumors of Consumer's Demise Were Exaggerated
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Despite a run of ugly data in recent reports about the consumer, we have maintained the weakness was a soft patch and not the start of a broad retrenchment. Retail sales grew 1.6% in March with gains in every category save sporting goods. Motor vehicles, which have been spotty recently, increased 3.1% in March. That was the largest gain after gas stations, which rose with prices.
Still a Q1 Slowdown, But Not as Bad as Feared
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After rising at a 2.5% pace in Q4, consumer spending is poised for a slowdown in the first quarter. However, the better-thanexpected 1.0% increase in control group sales in today's report feeds into the calculation in the GDP report and suggests a more modest slowing than anticipated by many forecasters.
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Online retailers saw declines in two out of three months in the fourth quarter, but have now seen three straight monthly gains.
Author
Wells Fargo Research Team
Wells Fargo
