US retail sales rose in March for the second-straight month

Retail sales rose 0.7% in March from the prior month, a slower pace than February’s upwardly revised 0.9% gain, the Commerce Department reported Monday. That beat the 0.4% increase that economists projected, according to a FactSet poll. The figures are adjusted for seasonal swings but not inflation.

Retail spending has increased in seven of the past 10 months through March.

Sales were up across several categories in March, including at gas stations, which increased a strong 2.1% from February. Gas prices have steadily risen in the past several weeks. Still, excluding sales at gas stations, retail sales were up a robust 0.6% in March.

Online sales jumped 2.7% in March, while specialty stores saw sales increase a solid 2.1% that month. Spending at restaurants and bars rose 0.4% last month. Meanwhile, sales of electronics, clothes, and sporting goods fell 1.2%, 1.6% and 1.8%, respectively.

“Today’s retail sales figures show strong consumer spending wrapping up the first quarter of 2024,” said Claire Tassin, retail and e-commerce analyst at Morning Consult, in a note Monday. “In March, promotional activity from e-commerce brands like Amazon helped to drive up online sales.”

Pressure on rate cuts

Monday’s report adds to evidence that the US economy remains solid, keeping the Federal Reserve in wait-and-see mode. A strong economy means the Fed won’t be in a rush to cut rates, especially considering that there are some signs that inflation’s progress has stalled in recent months. Fed officials have said they are not yet convinced that inflation is truly headed toward their 2% goal.

“With inflation running above target, economic growth continuing to show momentum, and elevated prices across a range of asset markets, the current stance of monetary policy is appropriate,” Kansas City Fed President Jeffrey Schmid said Friday at a conference in Overland Park, Kansas. He does not vote on interest rate decisions this year.

“Therefore, rather than preemptively adjust the policy rate, I would prefer to be patient and wait for clear and convincing evidence that inflation is on track to hit our 2% target before adjusting the stance of policy,” he said.

For now, interest rates are at a 23-year high after the Fed raised rates aggressively starting two years ago. Analysts at major Wall Street banks have recently pushed back their estimates on the timing of the first rate cut. Goldman Sachs is forecasting the first cut to be in July instead of June, while Bank of America now sees the first cut in December instead of June.

This story is developing and will be updated.

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