US Retail Sales bounce as savvy consumers buy ahead of tariffs

James Knightley ING Economic and Financial Analysis

Retail sales jumped as consumers brought forward purchases of 'big ticket' items to get ahead of feared tariffs. But with confidence plummeting on price, job and wealth concerns, the consumer will be less of a growth engine later in the year.

Spending surge to give way to a likely slump

US retail sales jumped 1.4% month-on-month in March, exactly in line with consensus. It's clear from high frequency reports that many consumers in the market for 'big ticket' imported items brought forward their purchases to get ahead of feared tariffs. We already knew that the volume of auto sales surged nearly 11% last month and this translated into a 5.3% MoM jump in value of sales in today’s report. Electronics didn’t bounce as much as we had suspected it might though, rising a paltry 0.8% MoM while internet sales rose just 0.1%.

The 'control group' which excludes volatile items such as autos, building supplies (+3.3% MoM – metals subject to tariffs), gasoline (-2.5% on falling fuel prices) and dining out (+1.8% on better weather) was softer at 0.4% MoM growth versus the 0.6% consensus. February's 'control' number was revised a little higher from 1% to 1.3%, but given this metric correlates strongly with broader consumer spending patterns that feed into GDP it is a little disappointing. Remember that these numbers are all month-on-month changes in the nominal dollar value of sales. They need to be deflated by the price index that will give a smaller volume growth figure to be plugged into GDP estimates.

The reports suggests that while we are likely to avoid a negative first quarter GDP print, it will only just scrape above zero and the potential rebound in the second quarter is unlikely to be huge given tariffs are soon going to be noticed at a time when consumer confidence is under pressure on three fronts: 1) anticipation of squeezed spending power after tariffs push up prices, 2) worries about a weakening jobs market amidst government spending cuts and 3) declining wealth after the sell-off in equity and bond markets.

Read the original analysis: US Retail Sales bounce as savvy consumers buy ahead of tariffs

Author

James Knightley

ING Economic and Financial Analysis

James Knightley is the Chief International Economist in London. He joined the firm in 1998 and has been covering G7 and Western European economies. He studied economics at Durham University, UK.

AUD/USD bounces off weekly low on Israel-Lebanon ceasefire

AUD/USD recovers slightly from the weekly low during the Asian session on Thursday as a new Israel-Lebanon ceasefire keeps a lid on the safe-haven US Dollar. Meanwhile, the US and Iran remain at odds over key issues, which, along with hawkish Fed expectations, act as a tailwind for the buck. Furthermore, diminishing odds of an RBA rate hike in June cap the currency pair as traders keenly await the US NFP report on Friday.

USD/JPY remains close to 160.00 intervention threshold on Mideast tensions

USD/JPY struggles to find acceptance above 160.00 and retreats from a one-month high during the Asian session on Thursday amid fears that authorities will step in again to prop up the Japanese Yen. Furthermore, a new Israel-Lebanon ceasefire caps the US Dollar and supports the currency pair. However, renewed US-Iran tensions favor the USD bulls amid Fed rate hike bets and also hold back the JPY bulls from placing aggressive bets amid economic risks stemming from the Middle East conflict, suggesting that dips are likely to be bought into.

Gold bounces off one-week low; upside seems capped on Iran uncertainty

Gold recovers from a one-week low touched during the Asian session on Thursday, as news of an Israel-Lebanon ceasefire acts as a headwind for the safe-haven US Dollar. However, renewed hostilities in the Gulf, along with stalled US-Iran peace talks, keep geopolitical risks in play and should support the USD. Moreover, US-Iran tensions remain supportive of higher Crude Oil prices, fueling inflationary concerns and bolstering bets for higher interest rates for longer. This should cap the non-yielding bullion and warrants caution for bulls.

Bitcoin drops below $65K amid reinforced bear market signals

Bitcoin dipped further below $65,000 on Wednesday, with onchain data from Glassnode signaling a market firmly in a bear phase. The decline has pushed prices back into a key valuation range between the Realized Price and the True Market Mean. Glassnode noted that a key shift in market structure has also emerged.

The upside-down math of debt

In 2010, Professors Carmen Reinhart and Kenneth Rogoff published a paper, Growth in a Time of Debt, which instantly went viral. The main thesis of the paper was that once a government's debt-to-GDP ratio crosses above 90%, a financial crisis and default are around the corner.

Recession on paper: What really moves the Canadian Loonie now?

Statistics Canada handed the headline writers a gift and the analysts a headache. Real GDP shrank 0.1% on an annualized basis in the first quarter, and with the fourth quarter of 2025 revised down to a 1.0% contraction, that is two negative quarters in a row, the textbook definition of a technical recession and Canada's first since the pandemic.