A Decline In Retail Sales Is Another Sign Of A Softening Economy For U.S.

Retail sales fell 1% in March, the fourth loss in five months, showing a slowing in the US economy and a shift in consumer spending patterns.

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Retail sales account for a large portion of consumer expenditure and provide information on the economy's health. According to a Wall Street Journal survey of economists, sales were expected to fall 0.4%.

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If car dealers and petrol stations are removed, receipts fell by 0.3%. Automobile and gasoline purchases inflate total retail expenditure.

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Sales fell the most in four months in March, owing primarily to the reduction of vehicle and gasoline purchases.

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According to experts, a late Easter break may have also moved some sales into April that would typically have occurred in March.

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Sales of new automobiles and parts, a volatile sector, decreased by 1.6% last month.

Gas station receipts fell 5.5%, owing primarily to decreased gasoline prices. Yet, it is a positive thing that Americans are spending less money on gasoline.

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But, Americans are set to spend more for petrol in April after the oil cartel OPEC curtailed supply and prices skyrocketed.

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Retail sales were sluggish even after accounting for auto dealers and petrol stations. Most major categories saw a drop in sales, including home centers, electronics stores, and department stores.

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The lone exception is Internet retailers. Sales increased by 1.9%.

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Bars and restaurants, the sole service sector in the retail survey, are one category that economists are keeping a careful eye on. Restaurant receipts increased by 0.1% last month after falling by 1.6% in February.

When the economy is doing well and Americans feel safe in their employment, restaurant sales tend to grow. When economic downturns, sales decline.

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Broad picture: Retail sales haven't plummeted, but they're also not increasing as quickly as they were in 2021 and early 2022.

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Why is this so? Household earnings have been eroded by high inflation. The government's pandemic stimulus has run out. Rising interest rates have also increased the cost of large-ticket goods such as automobiles.

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Even so, Americans continue to spend a lot of money to get out and about.

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Consumers are spending more on services like travel, hospitality, and entertainment and less on things like consumer gadgets and office supplies. It is a significant shift from what occurred during the epidemic.

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This is assisting in keeping the economy afloat. Nevertheless, if the economy continues to stagnate, expenditure on services may suffer as well.

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Looking ahead: "U.S. Retail sales declined dramatically in March as consumers grew more cautious, adding to other recent data releases that have shown a worsening [in the economy]," said CIBC Economics economist Katherine Judge.

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Market reaction: Before the retail data, the Dow Jones Industrial Average DJIA, -0.55%, and S&P 500 SPX, -0.30% were scheduled to open neutral in Friday markets.

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