U.S. retail sales rebounded in March after three straight monthly declines as households boosted purchases of motor vehicles and other big-ticket items, suggesting consumer spending was heading into the second quarter with some momentum….Sounds pretty good, until you dig into the actual retail sales report from the Census Bureau and realize that the increase was largely confined to one area of the economy.
The Commerce Department said on Monday retail sales increased 0.6 percent last month after an unrevised 0.1 percent dip in February. January data was revised to show sales falling 0.2 percent instead of the previously reported 0.1 percent drop.
Economists polled by Reuters had forecast retail sales rising 0.4 percent in March. Retail sales in March increased 4.5 percent from a year ago.
Retail sales March 2018
Motor vehicles and parts dealers +2.0% (+$2.0 billion)
Everything else +0.2% (+$0.76 billion)
TOTAL CHANGE +0.6%, (+$2.76 billion)
That’s about all that was selling last month.
The big jump in auto sales was especially odd because autos had slipped badly leading up to that report, going down by 1.3% in February and only up 1.8% in the 12 months prior to March 2018. I’m going to need more than 1 positive month of car sales before I think the tax cuts changed anything for that sector.
And that 0.2% ex-auto figure is pretty soft, given that retail sales don’t take inflation into account. In addition, all retail sales (INCLUDING autos) were only up 0.2% total for the 1st 3 months of 2018. That’s a notable slowdown from 2017’s strong retail sales, where we saw a full-year increase of 5.1%. Those lower sales are a big reason why 1st Quarter GDP is likely to be hovering closer to 2%, which is well below the 3.3% that the Congressional Budget Office is planning on for this year.
So no, I’m not willing to say that the Piece of Shit tax bill is doing much to drive people to open their wallets more, at least not yet. And if it doesn’t happen soon, watch for the US budget deficit to open up even wider throughout the rest of 2018, because in a country that has 70% of its GDP tied to consumer spending, people need to buy stuff to keep economic expansions going.