US Retail Sales Decline for Second Straight Month in March Amid High Inflation and Borrowing Costs

Retail sales in the US decreased for a second consecutive month in March, a sign that consumer spending is slowing as a result of high inflation and rising costs of borrowing.

According to data released by the Commerce Department on Friday, the value of all retail purchases decreased by 1% after declining by an upwardly revised 0.2% in February. Sales decreased by 0.3% when petrol and automobiles were excluded, which is less than anticipated. The numbers don’t account for inflation. Last month, eight out of thirteen retail categories saw declines, with petrol stations, general merchandise and electronics leading the way. According to the study, automobile sales fell 1.6% in March. Petrol station sales dropped 5.5% in value, which is the most since April 2020.

US Stock Futures Decline as Retail Sales Fall Short of Economist Expectations

World Business: The numbers provide more proof that as financial circumstances tighten and inflation lingers, momentum in household spending and the overall economy is faltering. Officials from the Federal Reserve have hinted that a halt to their campaign of interest rate increases is imminent. Sales of the so-called “control group,” which don’t include food services, auto dealers, building supply stores, or petrol stations but are used to calculate GDP, fell by 0.3%, which was better than anticipated. In a Bloomberg survey of economists, the median forecast predicted a 0.5% drop in overall sales. While US stock futures declined after the data, Treasury yields increased along with the dollar.

To keep afloat, several Americans are beginning to tighten their budgets. As weaker wage growth, fewer tax refunds, and the expiration of pandemic-era benefits weighed on spending, other data released this week by Bank of America showed card and debit usage slowed last month to the worst level in two years. However, since the numbers aren’t adjusted for inflation and mostly solely reflect spending on items, it might be challenging to draw firm conclusions from the retail sales report. Later this month, a separate report on March consumer demand which includes price-adjusted spending on goods and services is due. The report’s sole service sector category, sales at restaurants and bars, saw a little increase after declining the month before.

According to the consumer price index report released on Wednesday, core inflation remained steadfast in March despite the exclusion of food and energy expenses, which economists view as a more accurate underlying indicator. Based on the business news article, the data released on Thursday, cost pressures have subsided to their lowest level since the pandemic’s inception last month. All of these numbers, together with further information on housing, manufacturing, and inflation, will be taken into account by the Fed at its upcoming policy meeting on May 2 and 3.

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