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The numbers: Sales at retailers dropped 1% in March and declined for the fourth time in the past five months, reflecting a slowdown in the U.S. economy and a shift in consumer-spending habits.
Retail sales are a big part of consumer spending and offer clues about the strength of the economy. Sales had been forecast to drop 0.4%, based on a Wall Street Journal poll of economists.
Receipts shrank a smaller 0.3% if auto dealers and gas stations are excluded. Car and gasoline purchases exaggerate overall retail spending.
Big picture: Retail sales haven’t fallen off a cliff, but they also aren’t rising rapidly like they did in 2021 and early 2022.
How come? High inflation has eaten away at their incomes. Government pandemic stimulus has dried up. And rising interest rates have made purchases of big-ticket items such as cars more expensive.
Americans are still spending plenty to get out and about, however. And that’s helping to keep the economy afloat.
Market reaction: Before the retail report, the Dow Jones Industrial Average
DJIA,
and S&P 500
SPX,
were set to open higher in Friday trades.
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