There were a few important reports on the U.S. economy released this morning. First, data from the Census Bureau showed that advance estimates of retail and food services sales for March totaled $446.9 billion, a decrease of 0.3 percent from February’s upward-revised reading (-0.1 percent to 0.0 percent). This was much worse than the 0.1 percent headline gain economists had expected and the decline was exacerbated by a sharp 2.1 percent drop in automobile sales last month. Core retail sales, which exclude the volatile autos and gasoline components, rose by just 0.1 percent in March, again below the consensus forecast and due largely to weakness at clothing stores, restaurants, and online merchants. Nine of 13 major retail categories showed gains last month but there have been signs recently that consumer spending is losing momentum, e.g. year-over-year growth is now at an arguably recessionary level. Some analysts remain optimistic, such as Michael Feroli, chief U.S. economist at JPMorgan, who said after this morning’s release that “We’re having a little bit of a soft patch here for the consumer, with no obvious rationale. It’s definitely a softer start to the year. Provided job gains remain as strong as they’ve been, we expect consumer spending should be OK.”
Elsewhere, a report from the U.S. Department of Commerce showed that total business inventories in America fell by 0.1 percent in February (lagged), in line with expectations, but total sales tumbled by 0.4 percent during this same period. Altogether this left the important stock-to-sales ratio at 1.41, a level recently seen only during the past two recessions. Given the way that U.S. gross domestic product (GDP) is calculated, this report, along with the disappointing retail sales figures, should cause many analysts to once again lower their estimates of first quarter economic growth.
**Note: A report on wholesale inflation was also released this morning but it will not be discussed until tomorrow when similar data on consumer inflation is released.**
Sources: Econoday, Bloomberg, Twitter, ZH, BofAML, Census Bureau, FRBSLPost author: Charles Couch