Apr 14, 2023 - Economy

Retail sales declined in March as consumers cut back spending

Courtenay Brown

Consumers pulled back on spending at retail stores for the second straight month, causing retail sales to fall 1% in March, the Commerce Department said on Friday.

Why it matters: The strong consumer spending that has long underpinned the economy is fading.

Details: The biggest spending drop-off last month was at gas stations, where retail sales fell sharply by 5.5% last month, helping drag down the overall figure.

That decline may be a reflection of cheaper gas since the data is not adjusted for inflation.

Yes, but: Even after stripping out gas stations, retail sales fell 0.6% — a notable decline after February's 0.2% drop.

That is the result of less spending across a broad range of retail categories, including stores that sell building supplies (-2.1%), electronics (-2.1%), and clothing (-1.7%).

The bottom line: The data sends a worrying signal about the health of the consumer, which has been a consistent bright spot for the economy.

But it may also be welcome news for the Federal Reserve, which has been looking for signs of cooler demand to help put a lid on inflation.

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Retail sales declined in March as consumers cut back spending

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