This morning the Commerce Department will publish its count of all the retail products and services sold in March. Here are five things to look for when the numbers are released at 8:30 EDT.
1. Auto sales will accelerate… but not too fast
Motor vehicle sales are 20 percent of the retail economy. When they do well, so does the rest of the sector.
In March, auto sales did well. About 400,000 more cars and trucks were sold in March than in February, according to numbers released by the Bureau of Economic Analysis earlier this month.
The expected boost from auto sales might be offset a bit by rising gas prices, said Jocelyn Paquet, an economist at the Bank of Canada. He added that both the good and bad increases were relatively small. “Either way,” he said, “we’re not talking about huge fluctuations.”
2. The holiday hangover has ended
Consumers spent the first two months of the year paying off bills from the holidays. Now there are signs that debts are under control and they’re ready to spend.
“Basically, people stopped using their credit cards in February,” said Andrew Zatlin, an economist with South Bay Research in San Mateo, California. Federal Reserve data show that it has been more than four years since consumers took on less credit card debt over the course of a month.
Now that the money is back in their pockets, it is only a matter of time before consumers start spending it, said Zatlin.
3. Boosts from tax refunds and Social Security
Taxpayers and seniors started to get new or larger checks from the government in March.
Alex Lin, an economist at the Bank of America Merrill Lynch, said refunds for people claiming the Earned Income Tax Credit and the Additional Child Tax Credit took longer to arrive this year — the result of a 2015 law to make sure those credits were not being used fraudulently. “It basically shifts [refund] spending from February into March,” he said.
Zatlin of South Bay Research pointed to two other income boosts that have been in effect for a couple months but whose recipients might not have spent the extra cash, until now.
Workers getting paid every two weeks, for instance, have now received at least three paychecks with more take-home pay due to new withholding amounts set by the tax cuts signed in December by President Donald Trump.
The Social Security Administration increased payments to beneficiaries by 2 percent for 2018. The first cost-of-living adjustment checks arrived in January.
4. Metaphorical and actual headwinds
An unusually cold March probably kept people from shopping quite as often. Bank of America credit card data suggests that weather was “probably a headwind,” said Lin, “but not enough to offset positives including the delayed tax refunds.
5. Retail will regain its footing
Retail sales shrank in January and February (and were stagnant in December), but economists are forecasting a modest increase for March.
“Overall we are expecting a pretty strong bounce,” said Lin. He expects that momentum to carry into the second quarter, which started in April.
“Forget January, February, March,” said Zatlin. “Q2 is when things will take off.”