US Retail Sales Decline for a Second Month on Fuel, Autos

(Bloomberg) — US retail sales fell for a second month in March, indicating household spending is cooling as Americans face high inflation and rising borrowing costs.

The value of overall retail purchases dropped 1% after an upwardly revised 0.2% decrease in February, Commerce Department data showed Friday. Excluding gasoline and autos, sales fell 0.3%, a smaller decline than forecast. The figures aren’t adjusted for inflation.

Eight out of 13 retail categories fell last month, led by gasoline stations, general merchandise and electronics. The report showed vehicle sales declined 1.6% in March. The value of sales at gasoline stations slid 5.5%, the most since April 2020.

The data add to evidence that momentum is slowing in household spending and the broader economy as financial conditions tighten and inflation persists. Federal Reserve officials have indicated that they are getting closer to pausing their campaign of raising interest rates.

So-called control group sales — which are used to calculate gross domestic product and exclude food services, auto dealers, building materials stores and gasoline stations — declined 0.3%, also better than expected.

The median estimate in a Bloomberg survey of economists expected a 0.5% decline total sales. Treasury yields rose with the dollar, while US stock futures fell following the data.

Card Data

Some Americans are starting to tighten their belt to stay afloat. Separate data out this week from Bank of America (NYSE:) showed credit and debit usage decelerated last month to the weakest pace in two years as slower wage growth, fewer tax refunds and the end of pandemic-era benefits weighed on spending.

That said, it can be difficult to draw concrete conclusions from the retail sales report as the data aren’t adjusted for inflation and mostly only capture spending on goods. A separate report on March household demand that includes price-adjusted goods and services spending is due later this month.

Sales at restaurants and bars — the only service-sector category in the report — edged up after falling in the prior month.

The consumer price index report on Wednesday showed so-called core inflation — which excludes food and energy costs and economists see as a better underlying measure — remained stubborn in March.

Figures Thursday showed producer prices fell by the most since the start of the pandemic last month, pointing to an easing of cost pressures. The Fed will consider all these figures, as well as additional data on housing, manufacturing and inflation, during its next policy meeting on May 2-3.

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