• Retail sales rose a robust 1.6% in March, beating solid consensus expectations for a 1.0% gain.
  • The two biggest gainers were gas stations (+3.5%) and autos (+3.1%), but even outside of these categories, sales were up 0.9% on the month.
  • Excluding the most volatile components (gas, autos, building materials, and food services), the retail sales ‘control group’ rose 1.0% on the month – also beating expectations for a 0.4% gain.
  • Delving further into the details, sales appeared strongest in categories that had pulled back in prior months. Clothing rose 2.0% (-1.8% in February), food & beverages up 1.0% (-1.9% in February), and miscellaneous grew 1.8% (-1.1% prior).

Key Implications

  • The strong bounce back in consumer spending is reassuring that the soft patch to start the year is behind us. The growth in March provides a solid set up for the second quarter, which is good news because other sectors (investment, net-exports) are looking a tad soft heading into it.
  • The fundamentals for consumer spending are solid – strong job growth, accelerating wages, and, as an added bonus, lower interest rates. While the pace of gains are unlikely to match the stimulus-fueled pace of the past year, they will put a solid foundation under economic growth that is likely to average around the 2% mark over the remainder of 2019.


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