Retail Sales Rebound Sign of Higher Growth?

Popular Economics Weekly

Sales at U.S. retailers surged in March by the most in a year and a half, the latest in a string of reports suggesting economic growth is picking up after a soft spell of growth earlier in the year. Retail sales soared 1.6 percent last month, the government said Thursday. This beat economists’ expectations.


And the Conference Board reported its Index of Leading Economic Indicators rose 0.4 percent, which is another sign that economic growth is trending back to normal from the Q1 slowdown.

“The US LEI picked up in March with labor markets, consumers’ outlook, and financial conditions making the largest contributions,” said Ataman Ozyildirim, Director of Economic Research at The Conference Board. ”Despite the relatively large gain in March, the trend in the US LEI continues to moderate, suggesting that growth in the US economy is likely to decelerate toward its long term potential of about 2 percent by year end.”

A 2 percent growth rate is still enough to keep consumers happy and the unemployment rate low for the rest of this year.

New car sales and trucks rose 3.1 percent — the best performance this year, reports MarketWatch — to give the broader retail industry a boost. Auto receipts represent about one-fifth of all retail sales. Sales at auto dealers jumped 3.5 percent, as a result, the second big increase in a row.

But Americans also spent more to fill up their gas tanks. The average price of gas nationally rose almost 10 percent in March to $2.62 a gallon, government figures show. The last time prices were that high was in November.

Even if gas and autos are set aside, retail sales still rose a robust 0.9 percent. Among the big winners: Internet retailers, clothing stores, home-furnishing outlets and grocers. Sales rose between 1 and 2 percent in those segments.

Sales rose in every category except for stores that sell books, musical instruments and hobby items. Traditional brick-and-mortar department stores were also laggards: sales were flat.

But the 1.6 percent rise in March retail sales just recoups the -1.6 percent decline in December, while January and February showed miniscule growth, so we are back to 4 percent annual sales growth when 5 to 6 percent was the normal in 2017-18, in terms of overall sales—another sign of slowing growth this year.

The Conference Board’s leading indicators also showed strength in manufacturing and lower jobless claims, but the yield curve, or so-called interest rate spread between long and short term Treasury bonds, continues to narrow, pointing to a greater possibility of shrinking bank profits and credit availability later this year.

Yet both the Conference Board and U. of Michigan measures of consumer confidence also show consumers are happy at the moment, in part because the Fed says it won’t be raising their interest rates anytime soon and there are still more than 7 million job openings, according to the Labor Department’s latest JOLTS report.

All this means retail sales should continue to perk up on this Good Friday with the financial markets closed. We have to remember that as long as consumers are happy, the US economy will continue to grow, regardless of government missteps and geopolitical uncertainty.

Harlan Green © 2019

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About populareconomicsblog

Harlan Green is editor/publisher of, and content provider of 3 weekly columns to various blogs--Popular Economics Weekly and The Huffington Post
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