After a series of strong monthly gains, retail sales were more subdued in March, but still exceeded broad expectations. For the month, retail sales rose by 0.8%, while February sales were revised downward fractionally from 1.1% to 1.0%. The combined result was still a positive surprise.
Two factors likely contributed to the stronger than anticipated result, including the unseasonably warm weather which encouraged consumers to get out to the stores and shop. In addition, the Easter holiday fell early in April this year, pushing forward the accompanying shopping season, ultimately providing a boost to March sales. Looking forward, sales growth in the months ahead appears poised to slip a bit as these positive catalysts fade.
Solid retail sales came after a multi-month trend of better news on the jobs front and a more upbeat consumer mood. However, that positive momentum has recently shown some signs of breaking down. Weaker job growth, an uptick in jobless claims, and a modest decline in consumer sentiment in recent weeks may be enough to cause consumers to tap the brakes on spending in the weeks ahead as well.
Thus far consumers have largely shrugged off higher gas prices. Steady oil prices in March, and a slowdown in headlines surrounding the Middle East, should also help alleviate fears of skyrocketing prices at the pump for now.
Overall economic indicators continue to be mixed, while the fear/greed relationship tilted toward fear last week as equities suffered their biggest weekly loss of the year. Recent economic data has been mixed, and the potential exists for skepticism about the strength of the recovery to again become more apparent, should the recent trend continue.
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