The April retail sales report is expected to provide insight into whether consumers remain willing to spend despite economic uncertainty or are starting to hold back in anticipation of tougher economic times fueled by tariffs. Economists surveyed by Bloomberg estimate a 0.03% increase in retail sales for the month of April, a departure from the sharp 1.4% growth seen in March.
Here are five things to watch in the report:
1. Growth in retail sales, though it may not mean what you think
Typically, higher retail sales signal a healthy economy, reflecting both the ability and willingness of consumers to spend. But unusual circumstances, such as the Trump administration’s shifting trade policies, can lead people to spend more in advance, hoping to avoid future price increases.
Some recent economic data suggests that this kind of anticipatory behavior is already underway. The April jobs report showed that transportation and warehousing companies added 29,000 jobs last month, a sign that business owners may be rushing to build up inventory before new tariffs take effect. Similarly, the Commerce Department reported a 0.3 percent GDP contraction in the first quarter, driven by a surge in imports.
2. The tariff effect: automobiles, furniture, and building materials
At the start of the month, on what the Trump administration dubbed as “Liberation Day,” the Trump Administration imposed sweeping tariffs on imports from most countries. While many of those tariffs were later reversed, some remained in place–most notably on goods from China, a major exporter to the United States, with tariffs reaching as high as 145% until mid-May, when a new agreement was reached to de-escalate those tariffs to 30% as part of ongoing trade negotiations.
In response, some businesses may be raising prices to absorb rising import costs or to prepare for additional hikes that could follow if trade tensions persist. Among the goods worth close attention are automobiles, furniture, and building materials, which are sectors especially vulnerable to changes in trade policy and import tariffs. This potential spike could be amongst the first signs in the hard data to show that tariffs are already disrupting industries and supply chains.
3. Limited picture
While some of the impact of tariffs should be reflected in this month’s report, it won’t yet show the whole picture because of when the tariffs were implemented. It will take a bit longer to see the full impacts of the tariffs as companies need some time to make larger shifts such as passing on tariff costs to consumers or change their sourcing. The report will likely only capture initial reactions.
“We should expect somewhat of a weak report for the month of April, but it’s not going to show the full impact yet again, because we only had tariffs since the beginning of April,” said Tuan Nguyen, an economist at RSM US LLP.
4. Core Retail Sales Performance
Economists often focus on core retail sales, or figures that exclude the often volatile categories of autos, gasoline, and food services, to get a clearer view of underlying consumer spending trends. These core figures are considered a more stable measure of household demand because they filter out price swings and seasonal effects tied to fuel and vehicle sales.
A modest increase in this category can signal that consumers are growing more cautious, potentially tightening their budgets in response to economic headwinds such as rising tariffs, inflation, or uncertainty around trade policy. This core group is also closely watched because it directly feeds into the calculation of gross domestic product.
5. Weather
Although weather may seem like an arbitrary factor in assessing economic health, it has a significant influence on consumer behavior. In April, following a particularly cold and harsh winter, temperatures began to rise.
The warmer weather likely contributed to increased spending at restaurants and retail stores, as people became more inclined to go out and spend money on pastimes such as eating out and shopping. While this initial boost may level off as conditions continue to improve, seasonal changes often lead to short-term shifts in activity
