Retail Sales in the U.S. sank by -1.1% in March, which was well below the consensus estimate for a gain of +0.3%. This would seem to run counter to the generally accepted theme these days that the banking crisis and the economy have stopped getting worse. So, the question at hand becomes: Should we be worried?
Today’s report makes it quite clear that the consumer has not returned to their free spending days. Vehicle sales fell -2.3%, gasoline declined by -1.6%, electronics dropped -5.9%, and total sales at restaurants had their worst month since 9/11 with a drop of -1.4%.
When you factor in that sales of staples such as the items bought at grocery stores and drug stores increased and sales of health and personal care products increased by a record +6.1%, it becomes clear that there has been a change in attitude among shoppers.
After revisions, the jump in January of +1.9% and the increase in of +0.3% in February seemed to indicate that the economy might be starting to turn the corner. And since the U.S. Consumer is responsible for something on the order of 67% of the country’s GDP, this uptick in spending helped investors to consider looking ahead.
However, before you run and hide underneath your desk again, keep in mind that the Easter holiday was very late this year and this most certainly could have wreaked some havoc with those seasonal adjustments we are all so fond of.
Looking ahead, the late Easter, spring break, and warmer weather across the country appears to have helped boost sales in the first week of April as the ICSC/Goldman Sachs Retail Chain Store Sales Index rose by 0.8% last week. And although the reading is down on a year-over-year basis, this is the best reading since September.
But then again, with stores being closed on Sunday for Easter, next week’s readings are sure to take a hit.
We bring up the conflicting data not so much to confuse you but to illustrate how difficult it can be to get a fix on the true picture of retail sales by using data alone. However, if one chooses to look at the glass as half-full, then we can say that January and February were stronger than expected and March may have been artificially slower.
So, since the stock market game is all about expectations versus reality, be sure to stay tuned for next month’s numbers…
SPDR S&P Retail
SPDR S&P Retail
S&P 500
S&P 500
