On Monday morning, the U.S. Department of Commerce will release the latest advanced monthly retail sales and food services report. Economists surveyed by Bloomberg estimate a 0.4% increase in retail sales for the month of March. “A little bit of a step down, still positive but not as strong as consumer spending in early 2024” said Kevin Cummins, chief economist at NatWest Markets.
Here are five things to look out for on Monday morning’s report:
1. Gas prices will heavily influence the report
The increase in gas prices over the month of March will have an impact on this month's numbers. Gas prices went up to a current $3.63 compared to the $3.41 a month ago, according to AAA. Consequently because the prices are going up, the category will have a larger impact due to the uptick in prices, but not because consumers are buying more gas. The gasoline prices increase will offset the moderate auto sales of March.
2. The Easter Factor
The Department of Commerce does a good job at seasonally adjusting for set holidays like Valentine's Day, Halloween, Christmas and so on. However, Easter can fall anywhere from March to April and this year it fell in March. Due to the fact that it falls on a different day each year, the Department of Commerce has difficulty properly seasonally adjusting it, which can add a layer of uncertainty to the retail sales report numbers.
3. Consumers weariness to spend
Over the past few months we have seen a decrease in spending on “non-essentials” from furniture to apparel and even online sales. Consumers are running out of pandemic-related savings and are being forced to choose what is a necessity and what is not necessary. Although consumers are holding back on spending, a category that has remained up is food and drink services meaning that people are still ok with spending on a service, but not quite as quick to spend on a product. “Retailers have started throwing sales early on in the year instead of waiting for memorial day or labor day, which could be a sign that retail is ok, but not quite as well off as last year” said John D Herrmann, founder of Herrmann Forecasting LLC. This drawback is likely due to pandemic related spending on house renovations, furniture and appliances upgrades, that won’t need to be replaced for a while. Although weariness is high, the Chicago Fed advance retail trade summary (CARTS), core sales report for the month of March, released on April 12th, has shown a moderate increase of a 0.2% seasonally adjusted increase.
4. Inflation
In last week’s consumer price index report, it showed a 0.4% increase in March, 3.5% higher than last year. Which has incited concern for consumers, in order to survive these inflation prices many have been forced to change jobs every so often to make a liveable wage. However, the employment situation report for March showed a strong 303,000 increase in jobs and an unemployment rate of 3.8%, but these numbers only serve to look back and not precisely a view forward.
5. Unclear image of the economy due to missing factors
The retail and food services report largely overlooks many additional service related consumer spending categories such as travel, hotels, concerts, sporting events and more. These are categories that rack up large amounts of money on a month by month basis. March is the month of spring break for many students across the U.S. and is considered a huge week for travel, which would have accounted for a portion of March’s sales. The retail sales report alone can not give a clear picture of the economy’s current state due to the missing factors.
