• Retail sales rose 1.6% in March best since September 2017
  • GDP contribution more than doubled forecast 1.0% vs 0.4%
  • Dollar, stocks gain, Treasury yields fall

American consumers asserted the right to spend in a grand fashion in March boosting retail sales to the fastest expansion in 18 months as the booming job market put the shutdown marked holiday season to rest.

Retail sales surged 1.6% last month reported the Commerce Department on Thursday, far ahead of the 0.9% forecast and February’s 0.2% decline.  The GDP component control group rose 1.0%, more than twice its 0.4% prediction and its revised 0.3% drop in February.  Sales excluding automobiles climbed 1.2% in March following the February -0.2% slide.


The dollar rose marginally on the release at 8:30 am EDT, ticking up 10 points against the euro and 15 versus the yen. The Dow initially gained about 130 points from yesterday’s close when it opened at 9:30 EDT, but after losing almost all within the hour, it recovered and was trading +115 points at 12:30 EDT.  The 10-year Treasury yield had shed 3 points to 2.56% and the 2-year lost 2 to 2.38% by early afternoon. .

Initial jobless claims fell to 192,000 in the week of April 12th and the 4-week moving average shifted down to 201,250. Both numbers were the lowest in 50 years.


March sales completed the recovery from the uncertainty surrounding the dismal December figures, -1.2% in overall sales, -2.2% for the control group and the uneven numbers for January and February.  Many analysts noted at the time that the numbers made little sense, sales falling the most in a single month since the financial crisis, in the context of a robust labor market, rising wages and a 0.8% control increase in November.

The partial closure of the US Federal government from late December to late January had little economic effect aside from sentiment numbers but it had a large impact on the collection and collation of statistical data.  The Commerce Department admitted as much without detailing the specific problems.

Twelve of 13 major retail categories in the Commerce Department classification saw sales increases in March. Clothing purchases rose 2%, the strongest since May. Non-store retailers, the clumsy official title for internet outlets, gained 1.2% for the second month in a row.  

Annual retail spending moved up to 3.6% in March from 2.27% in February.

Consumption has seen a steady increase over the past two years prompted by consumers’ confidence in the job market and rising wages. Growth in retail sales had improved from 2.2% in August 2016 to 6.62% in July 2018. Last year’s decline to 4.03% by November brought sales to the bottom of their two year post-election range but the subsequent plunge to 1.64% in December 2018 was likely a result of the data problems around the January government shutdown.

The March surge in retail spending has also boosted GDP prospects for the first quarter. The control group category of retail sales, specifically sales excluding building materials, motor vehicles and parts and gasoline station and food service receipts has just completed its strongest quarter in 19 years. The 3-month moving average in March was 0.8%. Consumption hasn’t been this healthy since October 2005.


The Atlanta Fed GDPNow model for Q1 annualized economic growth climbed to 2.8% after incorporating the sales figures from 2.4% on April 17th.  The estimate has moved progressively higher since its first essay on March 1st of 0.3%.

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