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Retail sales exceeded Wall Street expectations in March

Retail sales exceeded Wall Street analyst expectations in March as consumers continued to spend despite a higher interest rate environment.

Retail sales rose 0.7% this month from the previous month, according to Census Bureau data. Economists had expected a 0.4% increase in spending, according to Bloomberg data. Meanwhile, retail sales in February were revised upwards to a rise of 0.9%, from a previous reading of 0.6%.

This is the second consecutive monthly increase in retail sales, suggesting that January’s surprising 1.1% decline was an anomaly rather than a trend.

March sales, excluding cars and gasoline, rose 1%, above consensus expectations for a 0.3% increase.

“The strong increase in retail sales in March and the upward revision to February’s data will further support the Fed’s view that there is no rush to cut rates,” Andrew Hunter, deputy chief economist at Capital Economics, wrote on Monday in a letter to customers.

Non-retail businesses led the gains by category, up 2.7%. The largest decline occurred in sporting goods and hobby stores, where turnover fell by 1.8%.

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The update on consumer spending comes as the economy remains largely on solid footing heading into 2024. Consensus projections for economic growth in the first quarter have been higher, while the labor market has continued to create more jobs than previously expected.

This strength in the economy has come about as recent inflation figures have shown that price increases are not slowing down as quickly as initially hoped. The combination of more persistent-than-expected inflation and an economy that is still growing has economists believing the Federal Reserve can wait longer to cut rates without tipping the economy into recession.

“There are some troubling signs of potential threats to the purchasing power of consumers at the lower end of the income spectrum, but these threats are not enough to tip the overall spending data downward,” U.S. economist Thomas Simons of Jefferies wrote in a letter to customers. on Monday. “Confidence in the continued strength of the labor market, together with strong savings stocks among retirees, will support strong consumer spending for the foreseeable future.”

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People shop at a clothing store in downtown Manhattan in New York on Tuesday, March 19, 2024.  (AP Photo/Ted Shaffrey)

People shop at a clothing store in downtown Manhattan in New York on Tuesday, March 19, 2024. (AP Photo/Ted Shaffrey) (ASSOCIATED PRESS)

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

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