March Retail Sales

Retail sales improved in March according to the Census Bureau.  Versus February, Americans spent $411.1 billion more to end the first quarter.  This is an increase of 0.8 percent for the month and a 6.5 percent positive change in the last year for an important component of the country’s output.  February’s gain was revised slightly lower to 1 percent from an initial reading of 1.1 percent.

Many underlying components had strong readings.  Building materials improved 3 percent for the month and are up 14.1 percent year-over-year.  Auto dealers saw a 1.1 percent improvement in March and have improved by 8.8 percent since the same month in 2011.  Finally, it comes as no surprise to see more money was spent on gasoline in March as the petrol price pressure persisted; gas stations saw 1.1 percent more dollars spent in the final 31 days of the first quarter and enjoyed a 7.6 percent surge in the year ending March 31st.

This indicator has put in a solid month to end the first quarter of 2012.  It will prove to be an ally of the gross domestic product (GDP) figures due later this week as retail sales comprise a significant portion of its largest component, personal consumption expenditures.  Only time will tell if the types of gains seen recently can continue as income growth is needed to support spending improvements, and it is currently not clear that, after taxes, Americans are making the types of gains needed to endorse future consumption advances.     (by C. Cox)