The number was slightly below expectations of a 0.6% increase and above February’s 0.3% gain. Unlike other government economic data, retail sales numbers are reported without adjustments for inflation.
Aside from gasoline, which spiked 37% year over year, sales at food and drinking establishments rose 19.4% from last year, while sales of motor vehicles fell.
Economists have been closely watching the spending of consumers, as it accounts for nearly 70% of the nation’s economic output. Inflation, now running at an 8.5% clip, is eating into the pocketbooks of consumers and moves by the Federal Reserve to hike interest rates are likely to dampen the enthusiasm of consumers going forward.
“Inflation should moderate, if only because some of the biggest increases are behind us,” economist Joel Naroff wrote on Tuesday following the release of the consumer price index for March. “But there is a difference between decelerating and low. Since monetary works with a lag, don’t expect major progress on the inflation front even if the Fed acts aggressively.”
Political Cartoons on the Economy
Meanwhile, the number of Americans filing first-time claims for unemployment benefits rose to 185,000 last week, the Labor Department reported on Thursday. That was an increase of 18,000 from the prior week’s 167,000.
The four-week moving average was 172,250, an increase of 2,000.
“It’s frustrating to be paying so much more for gas, groceries and housing, and consumer sentiment has been downbeat for quite a while now,” said Ted Rossman, senior industry analyst at Bankrate. “Yet the actual data isn’t nearly that bad, whether we’re talking retail sales or the job market. It may not feel great, but most Americans are actually doing pretty well financially.”