March 2018 Retail Sales

Retail sales were strong in March according to the Census Bureau.  This is good for an economy like ours which thrives on consumption.  Sales for retail and food services increased 0.6 percent to end the first quarter of 2018.  This uptick follows a disappointing February which experienced a declined of 0.1 percent.

Most categories improved in the period.  Motor vehicle sales benefited from a 2.0 percent jump versus February, accounting for nearly half of their 4.5 percent rise in the prior twelve months.  Nonstore retailers continued improving, rising 0.9 percent in March and 9.7 percent versus a year ago.  Furniture store sales built on their earlier successes, rising 0.7 percent.  Electronics are still in vogue as consumers spent 0.5 percent more on technology than a month earlier.  Healthcare and personal care stores also experienced a bump in their top-lines.  Some of these increases may have resulted from falling gasoline prices as stations’ revenues declined 1.8 percent.

Atlas’ favorite category continued moving forward.  Food services & drinking places rose 0.4 percent in March.  Americans spent 4.1 percent more dining and drinking away from home than a year earlier.  As we’ve mentioned in prior notes, Atlas watches this line in the report as a proxy for consumer attitudes.  Consumers must eat, but they do not have to eat away from home.  In theory, Americans are willing to pay more for food and drinks when they feel good about their economic circumstances; it appears they are pleased with their current situation.

Retail sales are signaling the economic expansion is not ending.  This monthly release covers roughly 20 percent of the overall economy and continues growing, but that will not happen forever.  As the business cycle turns, retail spending will likely suffer, helping to identify an economic contraction is underway.