Americans remained cautious about shopping in March, failing to splurge — even as lower gas prices put more money in their wallets.
Retail sales climbed 0.9% last month from February to $441.4 billion, the Commerce Department said Tuesday. Sales jumped 1.3% from March of last year.
The lift in spending was a welcome sign after a winter of sales declines but fell below economists’ estimates of a 1% or higher jump in March from February.
“2014 was a hard year,” said Sandy Simmons, 35. “I feel like the money is flowing a little easier” now.
Shopping at the Figat7th mall in downtown L.A., the Mid-City resident said she plans to indulge more this year. Simmons recently landed a job as a saleswoman at an e-commerce website and “I’ve been spending,” she said with a laugh.
Even so, some analysts said that consumers are still keeping a tight rein on spending even as wages are slowly edging up.
“It’s a nice rebound,” said Lindsey Piegza, chief economist for Sterne Agee. “But this modest rebound follows three consecutive months of negative retail sales. It doesn’t hit a great tone for robust consumer spending in the second quarter.”
Economists are split over how big of an effect harsh weather, which pummeled many parts of the country, sapped people’s desire to shop. Some said pent-up demand would help lift spending once temperatures warm up, but others said consumers would continue socking away their pennies to pay down debt instead of shopping.
“Consumers have been reluctant spenders so far,” said Sung Won Sohn, an economist at Cal State Channel Islands. “Much of the windfall from lower gasoline prices has been saved.”
Consumer spending makes up more than two-thirds of economic output, making retail sales a strong gauge of the country's economic health. Sluggish retail sales in recent months also reflects a slower pace of growth in the overall economy.
In March, employers added 126,000 net new jobs, the weakest showing in over a year, the Labor Department said this month. The average hourly pay of workers improved last month, but the average number of hours worked fell. A stronger dollar has also helped put the squeeze on exports.
The International Monetary Fund said Tuesday that global economic growth would continue at a slow pace and vary widely around the world. The IMF outlook also said the U.S. economy would expand 3.1% this year, a downgrade from a previous forecast of 3.6%.
Further signs of slowing growth could persuade the Federal Reserve to delay plans to raise interest rates, which some expect as early as June.
“We are going to see positive growth, but it will be very modest growth” this year, Piegza said. She forecasted that the U.S. economy would climb 1% to 1.5% in the first half of the year, and then accelerate slightly to 2% in the second half.
But in March, consumers buoyed by tax refunds streamed into malls for the Easter holiday and early spring shopping.
Auto and parts dealers posted 2.7% growth from February. Stripping away the category, which can be volatile, retail sales climbed 0.4% in March.
Nine of 13 categories showed growth. Building material and garden supplies saw a 2.1% rise, a sign that homeowners are sprucing up for spring. Furniture stores saw a jump of 1.4%. Clothing and accessories edged up 1.2%.
Gas stations fell 0.6%; a continued drop in prices at the pump should continue to be a windfall for consumers. This summer, drivers are predicted to enjoy the lowest seasonal gas prices in six years, the Energy Information Administration said.
At the CityTarget store in downtown Los Angeles, Erica Washington said anything she saves from filling up her car gets quickly spent to offset rising prices in other areas, such as groceries.
Washington, who works in tech support for the city of L.A., said she tries to find ways to trim costs even when splurging, such as using coupons for dinners out.
“Everything is so much more expensive now,” the Hawthorne resident said. “I’m just trying to make my paycheck stretch a little further.”
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