April’s retail sales report is forecasted to show a 0.5% increase, as it marks the first full look at the impact of the U.S.-Israeli war that has raised gas prices and pushed inflation up to the highest levels since March 2023.
Importantly, the report will show whether the war has caused U.S. consumers to pull back on spending. Here’s five things to watch in the report.
- Resilient Spenders.
Despite geopolitical tensions, U.S. consumers continued to spend in the last few months. March’s numbers exceeded expectations, as retail and food sales were up 1.7% to 752.1 billion dollars. Total sales between January 2026 and March 2026 were up 3.7% compared to the same time frame last year. Consumer spending remained resilient, even as people are paying more at the pumps,
- More Expensive Goods and Services.
The consumer price index, which measures how much consumers spend on goods and services, rose by 0.6% in April, depicting the higher cost of living impacting Americans. A key factor behind the increase was rising energy costs, up 3.8% from the month prior. As life becomes increasingly expensive for Americans, the retail sales report will determine if consumers are finally pulling back on spending. If so, the Federal Reserve may have to revisit cutting interest rates.
- Oil Demand Destruction.
The April data could also start to show signs of demand destruction, a concept that describes a significant decline in demand for goods, often as a result of high prices or reduced supply, according to Tuan Nguyen, economist at RSM US LLP. Often used when referring to oil or energy, the International Energy Agency has forecasted that demand for oil will outweigh the amount available in the global oil supply. For consumers, the impact is climbing gas prices that will likely force consumers to buy less or find alternatives. It could also mean that consumers who keep buying gas are likely cutting spending in other areas.
- Tax Refund Season.
Tax season was partially credited for March’s strong numbers. Even though cost-of-living increased, consumers were able to offset this cost because of their tax refunds, which were reported as higher than normal this year thanks to tax cuts outlined in President Trump’s One Big Beautiful Bill. Since that cushion has mostly worn down during the time frame reflected in this month’s retail sales report, it’s likely last month’s strong growth won’t be replicated this month.
- Excluding gas and automobile sales.
Much insight into the report will come from the retail sales number that excludes automobile sales and gasoline. As areas heavily impacted the war, the automobile and gasoline data in the report skews the overall data. While the headline figure remains critical, it’s also important to measure month-to-month spending in other categories to truly evaluate where else consumer demand is impacted.