Sales at Retailers Slow in March
Consumers hit by higher gasoline costs cut back spending on clothes and many other items in March, the Commerce Department reported Wednesday, as retail sales rose a disappointing 0.3% for the month, far below expectations for a 0.8% rise.
What strength there was came mainly from auto sales, which climbed 0.7% in March. Excluding autos, retail sales rose by just 0.1% last month, the weakest showing in nearly a year, since a 0.1% drop in April 2004.
That decline occurred as the economy was entering what Federal Reserve Chairman Alan Greenspan termed a “soft patch” as growth slowed abruptly during the spring of last year. Higher energy bills hit consumers at that time too, and they responded by abruptly cutting back their spending in other areas.
Analysts said the same thing could be occurring again this year, although more data will be needed to confirm that.
“The higher price of gasoline may just be braking the consumers’ drive to spend,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pa. “There were major cutbacks in spending on clothing, furniture and appliances.”
The 0.3% rise in retail sales followed a stronger 0.5% gain in February and was the smallest advance since a 0.1% rise in January, which had followed a 1.3% surge in December.
The strength in auto sales was offset by a 0.7% decline at general merchandise stores, a category that includes department stores, and an even larger 1.9% drop at clothing specialty stores, weakness that was blamed in part on cold weather that did not put consumers in the mood to buy spring clothes even though Easter came early this year.
Some analysts said the Commerce Department might have overcompensated for the early Easter in its seasonal adjustments and thus made the March performance look worse than it actually was.
The consumer has been the driving force powering the economy in the three years since the 2001 recession as Americans, bolstered by successive rounds of tax cuts and cheap credit, have spent with abandon.
The strong jump in sales of autos and auto parts in March followed a much weaker 0.1% increase in February.
Sales also fell by 0.6% at furniture stores and were down 0.3% at electronics and appliance stores.
Bucking the downward trend, sales at hardware stores were up 1.5%, sales at sporting goods stores rose by 0.8% and service stations posted a huge 2.1% increase, a rise that reflected in large part higher gasoline prices.
