U.S. consumers spent far more at American retail stores, gas stations, and online than economists had forecast, showing no signs that the household sector has shied away from everyday or major purchases due to higher gas prices or concerns over the conflict with Iran.
Retail sales rose 1.7 percent in March, an acceleration from the previous month’s 0.7 percent gain, data from the Commerce Department’s Census Bureau showed Tuesday. Economists had forecast a 1.4 percent increase. Compared with a year ago, sales are up four percent.
The rising price of fuel was seen as likely to drive up sales at gas stations while depressing sales elsewhere. Gas station sales surged 15.5 percent compared with February. The price of gasoline rose 21.2 percent, the Bureau of Labor Statistics said in a report released on April 10.
But even outside of gas stations, there was no sign of a slowdown in spending. Excluding gas stations, sales rose 0.6 percent, beating forecasts for a 0.2 percent gain. Compared with a year ago, sales excluding gas stations are up 2.9 percent.
This indicates consumer spending remained solid in March, rising despite higher energy prices and uncertainty created by the war with Iran. It is likely that the larger-than-usual tax refunds from President Trump’s tax cuts last year, as well as lower withholding due to those cuts, are helping to support consumer spending.
As well, unemployment is at an extremely low levels and layoffs have been near historic lows. Job security is often critical to consumer spending plans. Average hourly earnings rose 0.2 percent in March, the Labor Department said on April 3, and are up 3.5 percent from a year ago.
Sales at restaurants and bars rose 0.1 percent and are up 2.4 percent from a year ago. This is a highly discretionary category that many analysts think is unlikely to expand if consumers are feeling financially constrained or are worried about the economy.
Sales at car and truck dealerships, an area that has struggled over the past year, rose 0.6 percent but remain down 2.4 percent from a year ago.
Excluding restaurants, gas stations, and auto dealers, core sales rose 1.9 percent for the month and are up 4.2 percent from a year ago.
Furniture stores, another area where sales have been weak over the past year, jumped 2.2 percent. Analysts say that furniture sales have been hurt by a pricing surge—prices of home furnishings are up 3.6 percent through March—that some attribute to tariffs. Weakness in home sales, linked to high prices and high interest rates, are also seen as contributing to soft furniture sales.
Sales at electronics and appliance stores rose 0.9 percent. These are up 5.2 percent from a year ago. Department store sales rose 4.2 percent in the month, a much-needed boost to an area up just 0.8 percent from a year ago. Sales at the broader category of general merchandise stores rose one percent.
Big box home and garden center stores saw a 0.7 percent sales rise. Health and beauty store sales rose 0.5 percent. Grocery store sales rose 0.9 percent despite a 0.2 percent decline in the consumer price index covering food at home.
Sales were flat at clothing stores in March, suggesting that consumers took a breather from a red-hot sector whose sales are up 7.2 percent from a year ago. Sales in the category that includes sporting goods stores, hobby shops, and book sellers were flat for the month and up 3.8 percent over the past year.
Online sales jumped one percent, bringing the year-over-year gain to 10.1 percent.
The data are adjusted for seasonality but not for inflation. Consumer prices rose 0.3 percent in March, the Bureau of Labor Statistics said in a separate report earlier this month. Price of goods excluding cars and energy, the category closest to core sales, rose 0.1 percent.
The sub-category of sales known as the “control-group sales” is closely watched because it feeds into the government’s calculation of gross domestic product. These rose 0.7 percent, the biggest gain since August. The category excludes gas stations, food services, auto dealers, and building materials stores.