Retail Sales Loiter As Nervous Americans Eye Prices

Markets escaped the last of this week’s top-tier US data mostly unscathed.

Retail sales in the world’s largest economy rose 0.5% in March (figure below), data out Thursday showed. That was basically in line with consensus.

Notably, February’s 0.3% increase was revised markedly higher, to 0.8%.

The ex-autos print was a beat (1.1% increase versus 1% expected), the control group a miss.

A quick glance at the breakdown (which is probably all that’s warranted considering the benign headline prints) showed a sharp increase in spending at gas stations, solidly higher nominal spending on clothes and merchandise, a 1% rise in restaurant and bar spending (the only services category) and a 6.4% drop in non-store retailers.

“Gasoline didn’t impact the numbers as much as we thought likely, with sales from gas stations up ‘only’ 8.9%, despite the huge jump in price from $3.50/gallon in February to a peak of $4.33 on March 10,” ING remarked. “Nonetheless it is still the biggest growth contributor with gasoline station sales accounting for 9.6% of all retail spending in March.”

I’ll call the report “as expected” with two caveats. First, negative control group prints aren’t good for growth forecasts, and we now have two of those in a row. Second, we really need the PCE data to draw conclusions about the impact of surging prices on consumer psychology. The preliminary read on University of Michigan sentiment, due later Thursday, will be instructive.

Meanwhile, jobless claims were slightly higher than expected, but “higher” is a misnomer. At 185,000, initial claims are still loitering near all-time lows. The four-week moving average is just 172,250 (figure below).

These figures are, for all intents and purposes, meaningless in terms of providing anything like incremental information to inform the macro narrative. The labor market is tight. That’s settled.

Finally, import and export prices rose more rapidly than forecast. On a YoY basis, the former jumped 12.5% in March and the latter 18.8%.

Sanctions played a role, but I suppose I’d just note the obvious: The YoY prints for import prices have been at or near double-digits for 12 straight months (figure above).

That’s a lot of things, but disinflationary isn’t one of them.


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