US retail sales surged 9.8% in March (figure below), far more than expected, underscoring the impact of stimulus checks and likely providing confirmation bias for those keen on the notion that an economic overheat is in the offing despite the still hobbled labor market.
The blockbuster monthly gain came in near the top-end of the range. Forecasts from nearly six-dozen economists ran the gamut from a 3.5% increase to a 12% jump.
February’s 3% drop was revised to a 2.7% decline. The underwhelming numbers for February were generally seen as being “sandwiched” between two stimulus checks.
The ex-autos print, at 8.4%, was easily ahead of the 5% estimate. The control group posted a 6.9% gain, which was actually a slight miss.
March’s headline read was among the best on record (figure below). Outside of the pandemic context, it’s unheard of.
If you’re not into hyperbole, there’s really no way to describe this other than by resorting to boring adjectives like “strong.”
As I often put it, America is a nation of instant gratifiers. They’ll spend if you given them an excuse.
It’s also worth noting that, at least when it comes to retail sales, the pandemic is a memory, and a distant one at that (figure above).
Again, this is fodder for the overheat narrative. It’s just a matter of how rates react, and, relatedly, whether good news is bad news when it comes to Fed expectations.
“Astonishingly, the US 10-year yield is actually down on a US retail sales number approaching a 10% monthly gain,” AxiCorp’s Stephen Innes remarked. “I’m not entirely sure what that says other than the mild reaction would suggest a growth tantrum is not on the cards anytime soon.”
“As has been the case of late, investors have once again drifted back into a pattern of data apathy,” BMO’s US rates team wrote. If you like colloquialisms, “it’s known as Datapathy,” they said.