Consumer spending was stronger than expected in March as demand remained high despite declining sentiment, the Commerce Department reported Wednesday.
The advanced estimate of retail sales showed an increase of 1.4% on the month, better than the 1.2% Dow Jones estimate and higher than the 0.2% increase in February. The year-over-year rise was 4.6%, according to numbers adjusted for seasonality but not prices, while the monthly increase was the biggest since January 2023.
Excluding autos, the numbers also were stronger than expected, with sales up 0.5% compared with the 0.3% forecast. Economists expected the auto sales number to jump as buyers tried to get ahead of President Donald Trump‘s aggressive tariffs.
Motor vehicle and parts dealers reported a surge of 5.3% in sales.
The reading points to spending holding strong despite the crosscurrents of looming tariffs and expectations that the economy is weakening.
“Net, net, these are simply blow out numbers on March retail sales where the rush is on like this is one gigantic clearance sale,” said Chris Rupkey, chief economist at Fwdbonds. “Consumers are expecting sharply higher prices the next year and are clearing the store shelves and picking up bargains while they can.”
Markets reacted little to the release, with stock futures down slightly and longer-dated Treasury yields up.
The retail report counters multiple recent sentiment readings that show widespread fear that Trump’s tariffs will sink the economy into recession and spike prices. Last week, the closely watched University of Michigan consumer sentiment survey posted its second-lowest reading ever and expectations for one-year inflation were the highest since 1981.
Aside from the big move in auto-related sales, sporting goods, hobby and music stores saw a 2.4% increase, while building material and garden stores rose 3.3%. Food service and drinking places were up 1.8%, while gasoline stations reported a 2.5% decline as prices fell during the month.
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