The monthly sales number is being watched closely to see whether consumer spending is recovering after a string of uneven reports, including December’s sharp decline and February’s surprise drop of 0.2%. January’s sales gained 0.7%. March retail sales are scheduled to be released Thursday at 8:30 a.m. ET.
The sales report includes a key component used by economists to calculate GDP growth, scheduled to be reported next Friday for the first quarter. The retail sales report is one of the last pieces of data. First-quarter GDP looked to be barely growing early on in the period, but has gone from sub-1% to just over 2% in a few weeks.
Scott Anderson, chief economist at Bank of the West, said he expects to see a bounceback in March sales in part because because February sales were so weak.
“We think the consumer is going to slow the pace of their spending this year,” he said. “Wage gains picked up a little bit year over year, but it’s lackluster compared to the spending growth … hourly earnings growth is lagging consumer spending growth. That dynamic hasn’t changed. Consumers were really confident, spending a lot last year. They’re probably going to have to tighten their belts.”
Mark Zandi, chief economist at Moody’s Analytics, expects retail sales to be up at least 1%. “Part of that is vehicle sales. Weather is favorable so building materials supplies stores should be solid. I think it could be up at least a point, but it could be higher than that,” he said.
“Core sales [excluding autos, gasoline and building materials] are probably up 0.3%. I think the data coming out of payment processors continued to be soft in March,” he said. “Consumers are really turning cautious since the end of the year.”
Anderson said he expects GDP growth of about 2.2% for the first quarter but that number has been inflated by inventories so there could be some pay back in the second quarter.
Economists surveyed by CNBC/Moody’s Analytics rapid update had a consensus median tracking estimate of 2.1% for first-quarter growth.